USD/SGD: No end in sight for Singapore dollar strength
- The USD/SGD is struggling after the relatively strong retail sales data from Singapore.
- The country's sales soared by more than 7% in November.
- The pair also dropped because of the overall weaker US dollar.
The USD/SGD pair dropped to the lowest level since April 2018 after the strong Singapore retail sales data. The weaker US dollar has also contributed. It is trading at 1.3186, which is almost 10% lower than last year’s high of 1.4648.
Singapore retail sales bounces back
The Singapore dollar has strengthened substantially in the past few months because of the overall strength of the country’s economy. The manufacturing and industrial sectors have continued to do well because of high external demand for its goods.
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Also, Singapore, like other South Asian countries did well in handling the coronavirus. Indeed, Singapore has recorded just 58,000 cases and 29 deaths. Further, the country’s proximity to China has made it an ideal place for global multinationals that are avoiding Hong Kong.
Today, the USD/SGD dropped after the country released relatively strong retail sales. In total, the overall retail sales rose by 7.3% in November after rising by 0.2% in the previous month. This increase led to an annual decline of 1.9%, the smallest decline since September 2019. Indeed, the country’s sales have been in the negative zone since March 2019.
Figuratively, the total volume of retail sales in Singapore was s$3.6 billion. Excluding vehicles, the sales were s$3.1 billion. Total food and beverages dropped by 22.5% to s$705 million. Notably, the online component of this increased by 19.3%.
The USD/SGD pair also dropped due to the weak US dollar. The dollar index is hovering at the lowest level since April 2018 as investors in forex wait for the outcome of the Georgia Senate election. This outcome will determine the composition of the Senate during Joe Biden’s presidency.
USD/SGD technical outlook
On the weekly chart, we see that the USD/SGD pair has been on a strong downward trend since Aptril last year. In fact, it has fallen in three of the past 15 consecutive weeks and moved below all the weighted moving averages.
Oscillators have also continued to fall, with the Triple Exponential Average (TRIX) falling to -10; its lowest level in years. The average true range (ATR) has also fallen to the lowest level since March.
Therefore, the pair will likely continue falling as bears target the 1.300, which is the lowest level since January 2018.