25 Jun 2014
Long USD/SGD, target upper 1.2600 - Westpac
FXStreet (Bali) - Jonathan Cavenagh, FX Strategist at Westpac, shares the bank's view on the SGD, noting that a more bearish near term outlook should be expected.
Key Quotes
"We have entered a fresh long position in USD/SGD at 1.2509. We will look to add to this position on a dip back to 1.2470, with a stop in the low 1.2400 region. Our topside target is for a move back to the high 1.2600/low 1.2700 region."
"Our rationale for the trade reflects a number of factors. The trade helps hedge some of our short USD/CNH position. It also provides a hedge against a potential spike in risk aversion. Earlier this week our risk aversion index troughed at -2 standard deviations. Any rise in risk aversion should see USD/SGD push higher."
"The domestic back drop for Singapore also looks a little softer compared to other economies within the region. Our data pulse is arguing for a slowdown in IP growth, while export growth continues to underwhelm. Finally, our SGD NEER estimate remains comfortably above the mid-point of the MAS band and we see scope for a move back to the mid-point if not lower over the coming weeks."
Key Quotes
"We have entered a fresh long position in USD/SGD at 1.2509. We will look to add to this position on a dip back to 1.2470, with a stop in the low 1.2400 region. Our topside target is for a move back to the high 1.2600/low 1.2700 region."
"Our rationale for the trade reflects a number of factors. The trade helps hedge some of our short USD/CNH position. It also provides a hedge against a potential spike in risk aversion. Earlier this week our risk aversion index troughed at -2 standard deviations. Any rise in risk aversion should see USD/SGD push higher."
"The domestic back drop for Singapore also looks a little softer compared to other economies within the region. Our data pulse is arguing for a slowdown in IP growth, while export growth continues to underwhelm. Finally, our SGD NEER estimate remains comfortably above the mid-point of the MAS band and we see scope for a move back to the mid-point if not lower over the coming weeks."