USD/SGD rate rallies as Singapore retail sales falls again

The USD/SGD exchange rate continued rising on Friday after additional data showed that Singapore’s economy was slowing. The pair rose to a high of 1.3426, which was much higher than this week’s low of 1.3164.

Singapore retails slipped

After growing rapidly in the past few years, there are signs that the country’s economy is slowing. As I wrote here, the most recent data showed that the economy avoided a recession in the second quarter after growing by 0.7% year-on-year and by 0.3% on a QoQ basis.  The economy had contracted by 0.4% in the first quarter.

The most recent data showed that the country’s retail sales continued slipping in June. In a statement, the country’s retail sales dropped by 0.8% in June after falling by another 0.2% in May. This decline was worse than the median estimate of 0.0%. Retail sales have struggled in the past few months.

Meanwhile, the country’s retail sales dropped from 1.8% in May to 1.1% in June, lower than the expected 2.7%. These are important numbers since the country’s retail sales are a major part of the country’s economy. Manufacturing output has also struggled.

Still, some pockets of Singapore’s economy are showing some resiliency. For example, the finance and tourism industries are doing well. The most recent numbers showed that the country has seen millions of tourists in the past few months.

The next important catalyst for the USD/SGD pair will be the upcoming US non-farm payrolls (NFP) data. Economists expect the data to show that the economy added over 200k jobs in July after adding 209k in the previous month.

USD/SGD technical analysis

USDSGD chart by TradingView

The 4H chart shows that the USD to SGD exchange rate has drifted upwards in the past few days. It has moved above the important support level at 1.3200, the lowest level in July. The pair has jumped above the 25-period and 50-period moving averages and the ascending trendline shown in blue.

Therefore, the USD/SGD pair will likely continue rising as buyers target the next key resistance level at 1.3570, the highest point on June 29th, May 25th, and March 10th. A move below the support at 1.3340 will invalidate the bullish view.