Singapore dollar loses against the greenback

There have been strong signals from the US economy.

IG Markets Singapore noted:

The greenback gained against the SGD as we went back through the 1.23 level again, after strong signals from the US economy with lower-than-expected initial jobless claims, which dropped to a five-year low.

Better-than-expected PMI figures released from both China and most of the eurozone fuelled investors’ optimism for a rosier 2013. Investors are hoping for this gradual global recovery to continue at the very least at its current slow place.

That said, the picture seems slightly better than last year when the focus was on China’s fast growing economy suffering a hard landing and the potential eurozone breakup was making news headlines.

On the back of these more optimistic numbers, risk action was mixed. The euro trades above the week’s channel against the greenback to reach the 1.3380 but has traded slightly lower in early Asian trade. Both aussie and cable slipped lower overnight but are flat so far today.

Another round of yen weakness was seen yesterday, on the back of comments by Japan’s deputy economy minister that the yen's decline is not over and that the government has no problem with a move that sees 100 yen to 1 USD.

Traders reacted to his cue, with the USD/JPY moving over 200 points to trade firmly above 90. For most traders it still seems buying this cross on dips is a profitable strategy, with more realistic targets of between 94 and 95 being set currently.

OCBC Treasury Research meanwhile reported:

The SGD NEER this morning is around +0.67% above its perceived parity (1.2395) with the extreme strong end of the NEER fluctuation band estimated at around 1.2215.

Given the more biddish dollar tone in Asia, expect the 1.2330 ceiling to be potentially tested with the next stop expected at 1.2350.