Currency Briefing - what you need to know for Thurs April 26, 2012

The Singapore dollar is trading at $1.2435 with inflation figures supporting the local currency’s appreciation.

IG Markets Singapore said:

Despite an important Fed meeting last night and talk of stronger US growth the Singapore dollar is little changed against the greenback.

The local currency trades at $1.2435 this morning. It did see a slight strengthening as local inflation figures supported an appreciation of the Singapore dollar.

The currency pair is likely to remain supported at $1.2450 but face resistance at $1.2550.

The Fed took a more hawkish tone, although its low interest rate policy is still in place and likely to remain so into 2014.

But with Fed confidence in the US economy’s growth, a rise in interest rates may be earlier than forecast. GDP growth is expected to be between 2.4% and 2.9% this year.

RBS meanwhile noted (for 25 April 2012 trading):

Bernanke's insistence that the FOMC stands ready to provide additional accommodation should conditions warrant likely fuelled USD weakness into the close of the US session, though the USD did not weaken substantially.

Indeed, this is in line with our expectation that the FOMC was unlikely to be a catalyst for significant movement in the USD, outlined in yesterday's Global Currency Weekly.

The FOMC appears to have maintained its bias towards accommodative policy despite higher near-term growth and inflation forecasts and lower unemployment rate forecasts, though nothing in the statement or press conference today signalled that additional accommodation was forthcoming.

Despite the UK falling into technical recession in 1Q, GBP/USD actually closed the day higher on the back of broad USD weakness. The RBNZ decision was also today and they left the policy rate unchanged and further cautioned about the strength of the NZD.

The RBNZ said that "should the exchange rate remain strong without anything else changing, the Bank would need to reassess the outlook for monetary policy settings."