Singapore dollar edges higher against the greenback

The US dollar currently trades at $1.2629, down from above the $1.27 level last week.

IG Markets Singapore said:

The Singapore dollar continues a better week against the greenback as it continues to edge higher, albeit slightly.

The US dollar currently trades at $1.2629, down from above the $1.27 level it enjoyed last week.

Last night poor US retail sales sent the greenback lower, coming in 0.5% lower for June.

Traders were also positioning themselves ahead of Ben Bernanke’s testimony to Congress on the health of the US economy.

While QE3 is unlikely to be announced, traders will listen for clues as to when another round of asset buying might take place.

Such an event would send the dollar lower and traders would be keen to sell before this happened.

BK Asset Management meanwhile noted (for 16 July 2012 trading):

The euro rebounded strongly against the U.S. dollar to end the day near its highs. The rally in the euro had nothing to do with the outlook for the Eurozone because the EUR/USD was trading in negative territory before the U.S. retail sales report. European stocks ended the day virtually unchanged while Italian and Spanish bond yields edged higher.

According to the latest reports, Eurozone consumer prices fell 0.1 percent in June which means that inflationary pressures are nonexistent, giving the European Central Bank plenty of room to ease again if necessary. The Eurozone trade surplus increased in May from EUR4.5B to EUR6.3B but this was only after a major downward revision to the prior month's report.

The biggest story out of Europe today (aside from the ongoing LIBOR scandal) is reports that the ECB supports imposing losses on senior bondholders of Eurozone banks. The Spanish economy minister and Ireland's Ministry denies that the ECB holds this view but with the memorandum of understanding outlining the terms of Spain's bank bailout expected to be signed on July 20th, rumors are swirling.

If true, this would make senior bondholders vulnerable to losses, which would be a major shift in ECB strategy that could make European investments less attractive. The German ZEW survey is scheduled for release on Tuesday and given the troubles in Spain, investor confidence is expected to have deteriorated.