Singapore dollar continues to edge up against the greenback

The US dollar weakened against major currencies, with the local currency up at $1.2516.

IG Markets Singapore said:

The Singapore dollar goes into the last trading session of the week continuing to edge up against the greenback.

Traders were in a more upbeat mood last night as the ECB looked to stabilise the markets and US economic data came in better than expected.

This saw the US dollar weaken against major currencies, with the Sing dollar up at $1.2516.

Singapore also enjoyed good factory activity yesterday which helped boost confidence in the local economy and currency.

Output came in at 3.9%, much better than predictions of flat growth by analysts.

BK Asset Management meanwhile noted (for 26 July 2012 trading):

The euro ended the North American trading session sharply higher against the U.S. dollar. The rally in EUR/USD today came hand in hand with a sharp decline in 10-year Spanish bond yields, which is far more noteworthy than the recovery in the single currency.

While short covering can explain the squeeze higher in euro, the dive in Spanish yields reflects how much faith investors have in the European Central Bank.

Comments from ECB President Draghi this morning sparked a major recovery in the EUR/USD. The head of the central bank head pledged to do whatever it takes to preserve their currency. While no commitments were made, the recent sell-off in the EUR/USD is finally alarming enough that the ECB felt it necessary to reassure the market that they stand behind the currency.

Politicians and policymakers have claimed that many of proposed changes fall outside of the ECB's mandate but Draghi reminded us today that saving the euro is their mandate. This echoes recent comments made by ECB member Noyer who also said the central bank's definitive position is to do everything in its power to keep the euro but apparently hearing it from the head of the central bank made a world of a difference.