Currency Briefing - what you need to know for Thurs April 12, 2012

The Singapore dollar continues to trade within a tight range, sitting at $1.2576.

IG markets Singapore said:

The Singapore dollar has traded pretty flatly against the Greenback this week, despite a dip in trader sentiment as the global recovery looks shaky. The local currency currently sits at $1.2576 as it continues trading within a tight range ahead of tomorrow’s Monetary Authority of Singapore (MAS) semi-annual policy meeting.

The MAS is widely expected to keep monetary policy on hold and allow the local dollar to rise at a "modest and gradual" pace against other currencies to help combat persistent inflationary pressures.

Continued elevation in both headline and core inflation points to gains in the Singapore dollar nominal effective exchange rate (NEER) in coming months.

The local currency has remained resilient with some chilly winds blowing in from the world economy recently. The latest downbeat news comes from the Asian Development Bank which says emerging Asian economies were set to cool this year before rebounding in 2013.Emerging Asian currencies had already slid this week after weaker-than-expected data from the world's two biggest economies - the United States and China.

RBS meanwhile reported (for 11 April 2012 trading):

Price action in G10 FX was subdued, similar to other markets during the US session. USD pairs traded in tight ranges with a relatively quiet data calendar.

Looking ahead for the currencies, the key data release during the Asia session will likely be the Australian employment data, though there is a possibility that China will release FX reserves, New Yuan Loans or M3 growth for March.

The RBA statement in April hinted at a cut unless they were surprised by the upcoming data, mainly the inflation data on 27 April. But if the employment data is stronger than expected, it will make the market begin to wonder if more than one or two cuts is likely. So there is considerable two-way risk for rates and the currency on the labour data.