Currency Briefing - what you need to know for Mon April 23, 2012

The local currency is trading at $1.2489 and may be swayed by forthcoming consumer prices data.

IG Markets Singapore said:

The Singapore dollar has made slight ground against the greenback breaking through the $1.25 ceiling to trade currently at $1.2489.

Today the local currency may be swayed by consumer prices data out at lunchtime. Inflation is the main driver in the Monetary Authority of Singapore (MAS) appreciating the Singapore dollar. It doesn’t expect inflation to fall significantly this year.

We also have PMI estimates from HSBC this morning which could affect the global mood towards risk sentiment and Asian currencies. The outlook is much hazier in Q2 about the health of the global economy with mixed messages coming out the US and China, while Europe continues to worry traders, although no major crisis is expected. An improvement in China manufacturing data could boost risk assets.

For the US dollar there is a Fed meeting on Wednesday which may give a clearer idea of the likelihood of QE3 which would weigh heavily on the greenback.

RBS meanwhile noted (for 20 April 2012 trading):

G20 finance minister and central bankers agreed to upsize the IMF by over $430bn at their Friday meeting and early release of the news helped fuel risk seeking sentiment during NY hours to the detriment to the USD.

The CFTC released positioning data for the week ended 17 April which showed that traders further extended their net EUR short position to 118K contracts (from 101K in the previous week) and reduced slightly their net short JPY position to 57K contracts from previous 66K (which was near the 5-year high net short position).

Speculators became modestly more bullish on the commodity currencies and extended net long positions in AUD, NZD, and CAD.

GFT, on the other hand, reported (for 20 April 2012 trading):

The British pound pushed higher against the U.S. dollar for the fifth consecutive trading day thanks to a sharp rise in consumer spending.

Earlier this week, the minutes for the most recent Bank of England meeting revealed a less dovish central bank that is leaning away from increasing stimulus. Their reason was inflation but with consumer spending rising strongly in the month March, improvements in the underlying economy will provide monetary policy committee members with an even stronger reason to keep stimulus steady.