Singapore dollar slips further against the greenback; investors exit risk assets

Currency trading saw investors moving to safe havens such as the US dollar and gold.

IG Markets Singapore said:

The Singapore dollar ends a difficult week slipping further against the greenback to $1.2739. Investors continue to be spooked by events in Europe with no clear end in sight.

With Greek election chaos, downgrading of Spanish banks and fears for the Greek financial sector last night saw markets fall even further.

As investors exited risk assets they moved to safe havens such as the US dollar and gold.

Not even the growing calls for quantitative easing in the US (which would see cheap dollars flood the economy and reduce the value of the currency) has reduced the appetite for the greenback.

The Singapore dollar did gain a little after export figures released yesterday saw 8.3% growth in April. But the rise was short-lived.

RBS meanwhile noted (for 17 May 2012 trading):

GBP was under pressure for much of the London morning following Wednesday's dovish 1Q inflation report and BoE's Fisher statement today that he would be "uncomfortable" with continued GBP appreciation.

This is in line with our expectation that the BoE would not have been happy with the GBP reaction to their less-dovish than expected April minutes and will remain wary of comments that may strengthen the currency. We are better sellers of GBP but would caution against selling EUR/GBP, where valuation appears stretched at current levels.

The much softer than expected Philadelphia Fed index for May softened risk-oriented currencies, though our US economists note that the Philadelphia Fed index tends to be volatile and that it has undershot the national ISM manufacturing in each of the past 5 months.

USD/JPY fell below 80 and USD/CAD rose above our stop-level of 1.0188. Our stop is contingent on a two-day consecutive close above this level.