USD/SGD: Here’s why the Singapore dollar is retreating

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at He lives in Nairobi with his wife, son,… read more.
on May 17, 2021
  • The USD/SGD pair rose as traders reacted to the relatively weak trade numbers from Singapore.
  • The latest lockdown in Singapore has also contributed to a weaker SGD.
  • There are also concerns about Fed tightening.

The USD/SGD pair rose slightly as the market reflected the latest trade numbers from Singapore and a return to lockdowns in the country. The pair is trading at 1.3350, which is 0.30% higher than its lowest level on Friday.

Singapore dollar
Singapore dollar chart

Singapore lockdowns

Singapore’s government announced new lockdowns to curtail the new wave of the virus. The government banned dining-in restaurants and limited the number of people gathering to two people. It also requested employers to shift to remote working to slow the spread. As such, there are concerns about the country’s recovery and its recently-announced travel bubble with Hong Kong. 

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The USD/SGD pair also rose after the statistics agency published the latest trade numbers. The data revealed that non-oil exports increased by 6.0% in April after rising by 11.6% in March last year. This growth was mostly due to the non-electronics sector. On an MoM basis, the exports declined by 8.8% in April after rising by 1.1% in the previous month. In total, the country exported goods worth more than S$15.4 billion.

Meanwhile, Singapore’s non-oil retained imports (NORI) declined by $0.2 billion to S$5.5 billion. In total, trade during the month rose by 26.3% year-on-year, extending the 19,6% growth in the previous month. These numbers show the country’s economic recovery has started to moderate.

The USD/SGD is also rising because of the overall strong US dollar as traders start predicting further tightening by the Federal Reserve. This is after data showed that the US economy is recovering at a faster pace than what analysts were expecting. The labour market remains strong and inflation has risen to the highest level since 2008. In an interview with the Wall Street Journal, Blackrock’s Rick Rieder said:

“We don’t think inflation is going to be that high for a persistent period of time. But if the markets believe in inflation, well that’s more important than whether six months from now people say, ‘Gosh, you were right.’”

USD/SGD forecast

USD/SGD price chart

The four-hour chart shows that the USD/SGD pair has bounced back after it declined to 1.3310 last week. The pair is trading at 1.3350, which is slightly above the 25-day and 15-day exponential moving averages (EMA). It is also about 0.35% below the important resistance level at 1.392, which was the highest level on May 5. Therefore, the pair may keep rising as bulls target this resistance. Nonetheless, a drop below 1.3310 will invalidate this prediction.

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