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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 past two weeks have seen SGD/MYR pull back from an all-time high printed on Aug 11 at MYR3.2517. This coincided with the RSI's return from overbought territory (i.e. move back below the 70 threshold), which is a bearish signal.
- The rate's upswing was likely facilitated by the fact that the MAS was quicker to tighten monetary conditions via its FX-centred policy framework. It was also more aggressive, delivering hawkish tweaks to S$NEER settings four times since last October, which included two off-cycle moves.
- By contrast, the BNM was reluctant to inaugurate the tightening cycle and only began raising the Overnight Policy Rate from record low levels in May. In addition, it pledged to move in gradual, measured steps to avoid derailing economic recovery.
- The recent pullback in SGD/MYR has been out of sync with the parallel upswing in USD/MYR which lodged new cyclical highs as the BBDXY turned bid. Meanwhile, USD/SGD rallied since Aug 11, hitting resistance from the 76.4% recovery of its Jul - Aug sell-off.
- A miss in Singapore's final Q2 GDP data released Aug 11 may have generated some headwinds to the local currency, especially when compared to Malaysian figures released the day after, which showed healthy growth and beat expectations by a considerable margin. There are further data signals inbound, with both nations set to report latest CPI readings this week.
- SGD/MYR hovers above MYR3.2070, the 23.6% retracement of its Mar - Aug rally. The fact that this level acted as a layer of resistance back in May adds to its technical importance. A break here would open up scope for deeper losses towards the 382% Fibo support/channel floor at MYR3.1793/3.1785.
Fig. 1: SGD/MYR Hovers Above Fibo Support
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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