Singapore dollar remains at $1.2477 against the greenback

The US dollar faced some weakness heading into the Fed’s meeting, says IG Markets Singapore.

IG Markets Singapore said:

The Singapore dollar is virtually unchanged against the greenback this morning after an eventful night for both currencies.

The US dollar faced some weakness heading into the Fed’s meeting last night to discuss its economy with some traders expecting QE3 to be announced.

This never materialised but it did little to move the currency pair, highlighting just how many traders had lowered their expectations of another round of Fed asset-purchasing.

Meanwhile Singapore released PMI manufacturing data which showed a slip into contraction, which revealed cracks appearing in the otherwise resilient local economy.

But the local currency remained at $1.2477 against the greenback, holding onto gains it made last week to bring it below $1.25.

BK Asset Management meanwhile noted (for 1 August 2012 trading):

Currencies are trading higher ahead of the Federal Reserve's monetary policy announcement. Stronger than expected U.S. ADP numbers reassured investors that the central bank won't say anything particular damaging to the U.S. dollar.

In a few short hours, the Federal Reserve will deliver its monetary policy decision. Central bank meetings are traditionally one of the most market moving event risks for the forex market and based on the recent consolidation in FX, currency traders are waiting anxiously for a big announcement.

Unfortunately they will need to keep on waiting because the Federal Reserve is widely expected to leave the size and scope of its Quantitative Easing program unchanged. There's even a good chance that the August FOMC statement will contain the same language as the June statement.