USD/SGD in tight range as Singapore exports bounce back

The USD/SGD pair was little changed today as traders reacted to the impressive trade numbers from Singapore. The pair is trading at 1.3910, which is within the range it has been throughout this week.

Singapore exports jump

Singapore trade improved in June after experiencing a slight dip in May. According to Enterprise Singapore, the country’s non-oil exports (NODX) rose by 16.1% in June this year after falling by 4.6% in May. Analysts polled by Reuters were expecting the exports to fall by 2.2%. The imports rose by 0.50% on a month-on-month basis.

The jump in exports was mostly driven by non-electronics, which include non-monetary gold, specialised machinery, and pharmaceuticals. The non-electronics rose by 14.5% in June after falling by 9% in the previous month. Non-monetary gold rose by 238%.

Electronics, too, had a great month, rising by 22.2% in June after falling by 12.4% in the previous month. This growth was mostly because of disk media products, which rose by 59.8%. ICs and telecommunications rose by 29.1% and 37.8% respectively.

In total, total trade rose to S$74.2 billion, which was higher than the previous month’s S$70.5 billion. Total exports rose by 5.6% while imports rose by 4.8%.

NODX to Japan rose by 94.7% after rising by 52.9% in May, becoming the best-performing partner. It was followed by South Korea, whose growth rose by 85.6%. Other great performers were Taiwan, Malaysia, and the US.

Meanwhile, oil exports declined by 60.8% on a year on year basis after falling by 76.2% in the previous month. This decline was mostly because of lower oil prices and lower exports to Malaysia, Indonesia, and the European Union.

MAS chief warns of recovery

These numbers came two days after Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS) warned of the country’s situation. In a press conference, he warned that the country was still in a “dire” situation, with unemployment rate and corporate bankruptcies expected to jump.

The country is currently going through its first recession since it became independent in the 1960s. It’s growth contracted by 41.2% in the second quarter. As such, MAS expects that the economy will weaken by between 4% and 7%.

Ravi made the statement when presenting the financials of the authority. In the first half of the year, the authority had a net profit of S$10.6 billion ($7.6 billion), down by 45% from the previous year. The authority will return half of those profits to the government and save the rest as reserves. In the statement, he said:

“The recovery is likely to be slow and uneven, weighed down by renewed outbreaks of infection here or abroad. We will enter 2021 with higher levels of debt, in both the corporate and household sectors, which will act as a further drag on growth and could become a source of vulnerability.”

USD/SGD technical outlook

The USD/SGD pair is trading at 1.3915. On the daily chart, the price is below the 50-day and 100-day exponential moving averages and is along the 61.8% Fibonacci retracement level. Its volatility, as measured by the Average True Range has dropped to the lowest level since February this year. Therefore, the outlook for the pair is neutral, with the main support and resistance being 1.3870 and 1.4000. The latter is also along the 100-day and 50-day EMAs.