'Lacklustre' month awaits the Singapore dollar

Meanwhile traders anticipate a Greek solution.

IG Markets Singapore said:

The local currency has failed to move off its $1.2213 mark as caution remains the watchword among FX traders.

European lawmakers have failed to come to an agreement on Greece's emergency debt package which has seen sentiment slide off the risk table.

This has pegged Asian currencies back against the USD so far this week as traders feel unsure about taking on more bets.

While a Greek solution is likely to materialise, any pop for risk currencies could be muted as attention turns to the US fiscal cliff.

This theme could continue until the end of the year leading to a lacklustre month ahead for the Singapore dollar among other regional currencies.

DBS Group Research meanwhile noted:

EUR/USD held above 1.2950 despite uncertainties over a debt deal for Greece and the US fiscal cliff. This was attributed to the steady recovery in US equities after a weak open in yesterday’s session. Although the Dow and S&P500 posted losses for the day, the latter did not fall below the psychological 1400 level. It also helped that the Nasdaq was up for the overall session.

Hence, it will be interesting to see if US durable goods orders can surprise on the upside in October, the first month of the Thanksgiving/Christmas quarter. It will also provide some hint as to whether the Fed’s QE3 has helped to assuage America Inc’s fears over the US fiscal cliff.

At least, that’s what last week’s better-than-expected reading for October’s leading indicator was suggesting, in spite of Hurricane Sandy and the weak stock market that month. In any case, futures are pointing to positive opens for all three US equity indices in today’s session in anticipation of further improvements in consumer confidence and home prices data.

FYI, the congressional US Joint Economic Committee has scheduled a meeting next Thursday (December 6) on the fiscal cliff issue. The current deadlock is the unwillingness of the Republicans to accept tax hikes for the top 2% of the highest income earners (essentially, households that earn more than USD200,000) without the White House agreeing to cuts in Medicare and Medicaid. Despite this, market is giving US lawmakers the benefit of the doubt to avert the cliff by the end-December deadline.

For now, market is content that the IMF and the ECB appeared to have made some progress towards a debt deal for Greece. EUR/USD hit 1.30 temporarily this morning. We will probably see more attempts to sustain the rise today, especially during the European session.