29 Jan 2015
MAS: Chances of further easing in April relatively low - Nomura
FXStreet (Bali) - After the surprising easing by the MAS on Wednesday, Nomura notes, that the likelihood of another move at the next policy meeting, likely to be in early April, has fallen to a relatively low 20-30% for now.
Key Quotes
"In an inter-meeting announcement, the Monetary Authority of Singapore reduced the slope of its S$NEER policy band, but maintained the width and the level at which it is centred. We now estimate the slope to be at a 1% annualised appreciation rate."
"This was a “measured adjustment” and in our view largely driven by the inflation outlook. The MAS cut its headline 2015 inflation forecast to -0.5% to 0.5% from 0.51.5% and more significantly, its core forecast to 0.5-1.5% from 2.0-3.0% (Nomura: 1.5%)."
"However, there was no change to the growth outlook for 2015 at 2.0-4.0%. The likelihood of another move at the next policy meeting, likely to be in early April, has fallen to a relatively low 20-30%, in our view, for now."
"On SGD, we have had a relatively large long USD/SGD position, relative to our overall portfolio. Supporting our view to stay long are: 1) still no signs that there has been a change in the global disinflation cycle; 2) the broad USD strength theme still looks broadly intact given the ECB, Fed and BOJ policies, with SGD being highly sensitive to USD given its basket regime; 3) weak local growth/inflation momentum; and 4) being short SGD serves as a partial hedge to our long RMB, PHP, INR and IDR positions."
Key Quotes
"In an inter-meeting announcement, the Monetary Authority of Singapore reduced the slope of its S$NEER policy band, but maintained the width and the level at which it is centred. We now estimate the slope to be at a 1% annualised appreciation rate."
"This was a “measured adjustment” and in our view largely driven by the inflation outlook. The MAS cut its headline 2015 inflation forecast to -0.5% to 0.5% from 0.51.5% and more significantly, its core forecast to 0.5-1.5% from 2.0-3.0% (Nomura: 1.5%)."
"However, there was no change to the growth outlook for 2015 at 2.0-4.0%. The likelihood of another move at the next policy meeting, likely to be in early April, has fallen to a relatively low 20-30%, in our view, for now."
"On SGD, we have had a relatively large long USD/SGD position, relative to our overall portfolio. Supporting our view to stay long are: 1) still no signs that there has been a change in the global disinflation cycle; 2) the broad USD strength theme still looks broadly intact given the ECB, Fed and BOJ policies, with SGD being highly sensitive to USD given its basket regime; 3) weak local growth/inflation momentum; and 4) being short SGD serves as a partial hedge to our long RMB, PHP, INR and IDR positions."