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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
SGD
The MAS's aggressive tightening bias continues to drive SGD FX outperformance, following last week’s out of cycle move. The SGD NEER is now up just over 5% on levels compared to a year ago. This is the firmest pace since 2013.
- NEER YoY momentum is getting closer to headline CPI changes, although it is above core inflation momentum, see the first chart below.
- Next Monday delivers June CPI data where the market expects another pick up. Headline inflation is expected to rise to 6.0% YoY, versus 5.6% previously, while core is forecast to rise to 4.2% from 3.6%.
- Not surprisingly, the general trend has been for positive inflation surprises. In the past 6 prints the cumulative upside surprise has been +0.85ppts, although this is down from the +1.7ppts peak in March for this metric. On core inflation the cumulative upside surprise is a more modest +0.15ppts for the past 6 months.
- Additional upside surprises on Monday will reinforce the bias the MAS has more work to do in October. It should also keep the SGD NEER uptrend in place. The main risk is a sharper than expected slowing in global growth.
- Note the NEER is still some distance from the top end of the band according to Goldman Sachs estimates, still around -1% at this stage.
Fig 1: SGD NEER & Measures Of Singapore Inflation
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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