Currency Briefing - what you need to know for Fri April 13, 2012

The local currency has gained 0.5% on the US dollar.

IG Markets Singapore said:

The Singapore dollar has gained 0.5% on the Greenback this morning as the Monetary Authority of Singapore (MAS) confirms it will gradually appreciate the local currency.

This morning MAS announced its monetary policy statement, although most trader expected its Singapore dollar stance to remain unchanged. It currently sits at $1.2478 against the US dollar.

But the appreciation may be stronger after inflation expectations were revised upwards. Singapore uses the currency to help curb price rises.

Inflation forecasts are now at 3.5% to 4% for the year ahead. They previously stood at between 2.5% and 3.5%. Higher oil prices and a tight labour market are expected to be the main contributors to rising consumer prices this year.

"Core inflationary pressures have persisted, but will likely ease in the latter half of the year," MAS said in its half-yearly monetary policy statement.

RBS meanwhile noted (for 12 April 2012 trading):

Ahead of crucial macro data in China (highlighted by 1Q GDP), the trading environment was risk positive following stronger than expected Australian employment data and a large narrowing of the US trade deficit.

Comments from Fed leadership (Yellen and Dudley) highlighted their still cautious outlook for the economy and increasing expectations of QE3 may have provided a boost to US equities and aided the USD decline.

RBS is slightly above the consensus expecting an 8.5% y/y GDP print in China. With the widespread expectation for softer 1Q GDP growth, an above consensus print could benefit the higher-beta G10 currencies, particularly AUD.