Forex Flash: USD/SGD dips supported at 1.2300 – Westpac

FXstreet.com (Barcelona) - According to Strategist Jonathan Cavenagh at Westpac, “On the SGD leg, we remain downbeat on the outlook for the currency. Growth momentum remains quite weak and inflation pressures have rolled over in the past 12 months. While no change is expected at tomorrow's MAS policy announcement, particularly given the continued QE policies from the major central banks around the world, we wouldn't rule out a slight easing in the pace of SGD NEER appreciation.”

However, even if such an outcome doesn't eventuate we still see SGD as quite expensive at current levels. Our SGD NEER estimate is +1% above the mid point of the band (see the second chart in the attachment) and we see risks we move back towards the mid point, if not lower, in the coming period. Dips in USD/SGD towards 1.2300 should still be well supported.