USD/SGD forms ascending triangle as Singapore economy slows

The USD/SGD exchange rate has moved sideways as investors assess the strength of Singapore’s economy. The pair was trading at 1.3515 a few points above the year-to-date low of 1.3040. It remains sharply below last year’s high of 1.4491.

Singapore economy slowing

Singapore’s economy has done well in the past few years as demand for the company’s products and services jump. The country has become a favorite place for many companies in the financial services industry. 

For example, hedge funds and other asset management firms in the city have grown their assets under management (AUM) to a record high. Most of these are companies that want to have a good access to the Asian market. Also, most of them came from Hong Kong after China implemented the tough security law.

The strength of the Singapore economy is being seen in the real estate sector. While commercial real estate is contracting in key markets like London and New York, demand in Singapore remains at an elevated level. The occupancy rate in the central business district has jumped to over 94.4%.

Residential real estate has also boomed, forcing the government to put restrictions on foreigners. As a result, these measures are leading to lower USD flows to the city. Indeed, data published this week showed that house prices dropped for the first time since 2020.

The head of the Monetary Policy Authority of Singapore expects that economic growth will slow this year. He sees the economy will operate below its capacity. He also expects inflation to moderate in the coming months.

The next important catalyst for the USD/SGD forex pair will be the upcoming Fed minutes and non-farm payrolls (NFP) data. The two events will likely make the case for at least two more rate hikes later this year.

USD/SGD technical analysis

USD/SGD chart by TradingView

The daily chart shows that the USD to Singapore dollar exchange rate has been rising in the past few months. As it rose, the pair formed an ascending triangle pattern, whose upper side was at 1.3566. This price also coincided with the 38.2% Fibonacci Retracement level.

The USD/SGD pair has moved above the 25-day and 50-day moving averages. Therefore, the pair will likely have a bullish breakout in the coming days. If this happens, the next level to watch will be the 50% retracement level at 1.3765.