USD/SGD in holding pattern as Singapore exports fall after 3 months of gains

The USD/SGD pair was little changed in the Asian session as traders reacted to the latest trade data from Singapore. The pair is trading at 1.3950.

Singapore non-oil exports decline

The USD/SGD pair declined after Enterprise Singapore released the May trade numbers. The data showed that non-oil exports (NODX) declined by 4.5% in May, after growing by 9.7% on a year on year basis in April. The exports fell by 4.5% on a month on month basis after falling by 5.1% in the previous month.

In total, the country’s non-oil exports declined from S$14.9 billion in April to S$14.2 billion in May.

Meanwhile, non-oil retained imports of intermediate goods (NORI) declined from S$8,7 billion to S$6.4 billion. This was the lowest amount of trade since December last year.

According to the department, total trade dropped by 25% in May after falling by 12.9% in April. This was due to a 23.9% decline in exports and a 13.1% decline in imports.

The decline in exports was partly due to a 55% decline in non-electric engines and motors and a 24.5% decline in food preparations. Petrochemicals fell by 31.2%. These declines were partially offset by a 12.5% increase in electronic products.

Exports to the United States rose by 50.6% while those in Japan and Taiwan increased by 52.9% and 27.2% respectively. Those in the European Union, Hong Kong, and Thailand fell. Similarly, those to the emerging markets declined by 38.2%. Finally, oil domestic exports declined by 76.2% in May following a 64.9% decline in April.

Singapore reopening

The USD/SGD pair has been on a downward trend since March 24, when it was trading at 1.4642. This decline has mostly been because of a weaker US dollar and increased traction for the Singapore dollar.

The latter point has been mostly because of how Singapore handled the coronavirus pandemic and the ongoing tensions in Hong Kong. As tensions have increased in Hong Kong, most companies have started moving to Singapore, which is a major financial centre in Asia.

Meanwhile, economic data from the country have been increasing. According to Urban Redevelopment, home sales rose by 75% to 486 in May from just 277 in April. Analysts expect that house sales and the overall retail sales will continue to rise as the country reopens. According to the Ministry of Health, most businesses, including shops and restaurants will reopen this Friday.

Still, the finance ministry expects the economy to contract by 7% this year and possibly rebound in 2021, barring another outbreak. This will be the worst decline since independence.

USD/SGD technical outlook

The USD/SGD pair is trading at 1.3950, which is slightly above this month’s low of 1.3800. On the daily chart, the price is below the 50-day and 100-day exponential moving averages. The price is also slightly above the 61.8% Fibonacci retracement level.

Interestingly, it is also forming a bearish pennant pattern. This implies that the pair will likely break out lower. If it does, bears will attempt to move below the important support at 1.3800.