METI Cautious On Outlook Despite Strong GDP

Spot USD/SGD finished lower yesterday, though recovered from its Asia-Pac session lows as the greenback recovered amid month-end demand heading into the long weekend in the US. The pair dropped as low as 1.3226, the lowest since Feb 26 and broke a 76.4% retracement level at 1.3245 in the process. The recovery has seen the rate at 1.3247, bears look for a convincing break of the level to bring trend channel support of the move from March highs into focus at 1.3187 and then the 2021 lows at 1.3157 hit on Jan 6. Bulls will look to the 61.8% retracement level at 1.3300 and the 100-DMA at 1.3331.

• Fig.1: USD/SGD

Source: MNI/Bloomberg

• Markets are still digesting strong GDP data as a muted reaction was seen in the immediate aftermath of the release. Q1 GDP grew above estimates at 3.1%, consensus was 2.7%. Following the report the trade ministry left its 2021 growth forecast at 4%-6%. They did however caution against downside risks in its Q1 2021 economic survey: "While it is possible that the Singapore economy will outperform the "4.0 to 6.0 per cent" growth forecast for 2021, there are also significant downside risks. The most important is the trajectory of the COVID-19 pandemic. Countries are experiencing recurring waves of infections, with the emergence of more transmissible strains of the virus, the easing of safe management restrictions, and delays in vaccinating populations. These resurgences, as well as the countries' public health responses to them, will inevitably affect their economic growth. Given the experience of the last 15 months, there is hope that even if outbreaks flare up again, countries will be able to avoid repeated blanket lockdowns and their high economic cost, but this is far from certain. As these countries include some of our major economic partners in our region, the uncertainty in their outlook also affects Singapore."
• Full METI report here: