A Stronger Yuan Could See USD/SGD Drop

In-light of a weaker USD and lift in sentiment, we could see pairs such as USD/CNH and USD/SGD extend their corrections

In-light of a weaker USD and lift in sentiment, we could see pairs such as USD/CNH and USD/SGD extend their corrections

It’s early days, but we’ve seen a slight lift in global sentiment, resulting in the Chinese Yuan being allowed to appreciate against the USD at its fastest daily pace in 2-months yesterday. Considering that multiple USD majors and crosses displayed bearish reversal candles on Tuesday, before extending losses yesterday suggests it’s likely the USD correction is truly underway. So, in-light of improved sentiment, USD/CNY (and therefor USD/CNH also) could also retrace against their parabolic moves seen since May. Or we could consider trading ASEAN trade partner such as USD/SGD, as there are loose correlations among such trading partners.

We can see on the daily chart that USD/SGD had printed a bearish pinbar and hammer as part of a bearish wedge pattern. Moreover, the hammers have coincided with a bearish RSI divergence, in similar vein to the prior top in May. Yesterday’s sell-off was it’s most bearish session in two months (just like USD/CNY..) and has broken key support at time of writing.

  • It appears USD/SGD has topped and today’s break of support opens up a run towards 1.3725
  • The prior counter-trend move saw it shed -315 pips. If a similar move is to be repeated over the coming weeks, it could be headed towards 0.6325 support
  • A break above 1.3942 assume bullish continuation, although for trade management purposes, yesterday’s high around 1.3904 could be considered ot ‘step aside’ if it breaks higher.

Keep in mind that SGD is partially pegged to a basket of (undisclosed) currencies, and MAX (Monetary Authority Of Singapore) limit the volatility. But, with the correct theme and trend, remains a viable instrument to consider trading.

Related analysis:
Rand Bid as Monetary Policy Still Accommodative
The Closer You Look At ISM's PMI, The Uglier It Gets | EUR/USD, USD/CHF


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.