Key Technical Level In Focus

Spot USD/SGD is lower in early Asia trade on Tuesday, the pair is at a key level challenging yesterday's low at 1.3210 which was also touched but not broken on Feb 16. As a note the 2021 low is at 1.3157. The rate is struggling to break through here, but a move lower is needed if the downtrend from the March 2020 high is to stay intact.

• SGD is attracting flows as forward points decline which has eroded the usual negative carry for holding SGD. 12-month forward points are now at 18.71, turning positive last week after hovering around -10 for most of 2020.
• Markets look ahead to January CPI data at 0500GMT/1300HKT. Headline CPI is expected at 0.2%, compared to December's reading of 0.0%. Nomura are more pessimistic than the consensus: "We forecast a slight increase in headline CPI inflation to 0.1% y-o-y in January from 0.0% in December on rising global oil prices and a further increase in car prices, in line with higher certificate of entitlement (COE) premiums. Core CPI inflation should also increase further to -0.2% y-o-y from -0.3%, but partly on a low base effect from education fees."