Singapore dollar continues to lose ground against the greenback

This is despite the US dollar’s weakening as traders turn their attentions to the Fed’s Jackson Hole meeting on Friday.

IG Markets Singapore said:

The Singapore dollar continues to lose ground against the greenback despite USD weakness as QE3 hopes rise.

The USD has been weakening this week as traders turn their attentions to the Fed’s Jackson Hole meeting on Friday with strong bets being made on an announcement that another round of large-scale asset purchases will take place.

This saw the Dollar index, the USD’s value against a basket of major currencies, edge down last night.

But against the Singapore dollar it has moved up to $1.2545.

Trading has been thin in the summer lull and markets lack direction.

BK Asset Management meanwhile noted (for 27 August 2012 trading):

The euro held onto its recent gains against the U.S. dollar as the rumors continue to flow out of Europe. First it was talk of a yield cap on peripheral sovereign bonds and now there's speculation of a potential setback to the European Central Bank's bond buying program.

Most of these reports have not been substantiated but this morning, ECB member Asmussen admitted that the bond-buying program is still being developed and will be addressed at next month's monetary policy meeting.

While the market is focused on what the Federal Reserve will do come September, the European Central Bank is preparing to take additional steps to fortify the Eurozone economy. The euro recovered smartly from its July lows thanks to the rally in global equities and decline in Spanish and Italian bond yields.

Volatility in the FX markets have declined significantly in recent weeks but with growth in the region slowing and a number of Eurozone countries falling back into recession, the central bank still needs to work hand in hand with European governments to bring an end to the region's debt crisis.