Singapore dollar starts week with early gains against the US dollar

The Greek election results have resulted in a positive reaction in the global markets, says IG Markets Singapore.

IG Markets Singapore noted:

In-line with both risk and other Asian currencies, the Singapore Dollar has started the week on a strong note posting early gains against the greenback.

The Greek election results have resulted in a positive reaction in the global markets, and we have seen equities, commodities and risk currencies all push higher in early Monday morning trade.

The currencies seen as safe-haven plays of late, USD and JPY, have been pressured by the initial reaction. With the threat of potential stimulus from BoJ and the Fed at some point this week, they are likely to remain under pressure.

The risk here is that the situation in Greece or another part of Europe takes another unexpected turn, especially if the coalition in Greece fails to form as expected, or bond yields continue to rise for nations such as Italy and Spain.

With USD/SGD regaining its 1.26 handle this morning, whether or not it holds on to this seems to be in the hands of the macroeconomic moves out of Europe once again.

DBS Group Research meanwhile reported:

EUR/USD opened this morning at 1.2720, above last Friday’s close of 1.2636, and traded to a high of 1.2747 before easing back towards 1.2700 again. This was a knee-jerk reaction to a “market friendly” outcome at yesterday’s Greek election.

Viewed as a de facto referendum on whether Greece stays in the euro, the election was considered a potential catalyst that could hasten the break-up of the euro and lead to stress in the global financial system similar to the 2008 crisis.

This led the G20 to reassure markets late last week that central banks were standing by to provide support to financial markets in the event that Greek voters rejected bailout.