Singapore dollar struggles as traders move to safe haven assets

The local currency sits above $1.27 against the US dollar.

IG Markets Singapore said:

The Singapore dollar is still under a lot of pressure as its sits stubbornly above $1.27 against the greenback.

It currently trades at $1.2754 capping a week of losing ground as investor sentiment for risk assets remains low.

The local currency has struggled along with Asian currencies to keep up with the greenback as traders move to safe haven assets.

The dollar index, which measures itself against a basket of major currencies, rose this week to a 20-month peak.

And the euro hit a near two-year low against the dollar this week highlighting all currencies are struggling against the greenback in these times of trouble.

Many traders expect the greenback to trade above $1.28 against the Singapore dollar in the short-term.

GFT meanwhile noted (for 24 May 2012 trading):

The quest for safety continues to drive investors into the arms of the U.S. dollar. The greenback extended its gains against all of the major currencies, rising to a fresh 22 month high against the EUR and 15 month high against the Swiss Franc.

This morning's U.S. economic reports shined a brighter light on the U.S. economy. There were no major upside surprises but the modest decline in jobless claims and the rebound in durable goods orders confirm that the U.S. economy is recovering.

Jobless claims dropped 2k last week to 370k from an upwardly revised 372k while the four week moving average also fell 5.5k to 370k. Continuing claims dropped from 3.289 million to 3.260 million. Claims in May have been much lower than claims in April and for this reason, we are looking forward to a stronger non-farm payrolls report this month.

Durable goods orders rose 0.2 percent which was right in line with expectations. A rebound was expected after orders fell by a whopping 3.7 percent in March. Much of the rise however is attributed to transportation orders because without demand for automobiles and parts, orders declined 0.6 percent.

On a day when we have seen sharp disappointments in EZ and U.K. data, these U.S. economic reports only make the dollar a more attractive safe haven currency. The U.S. is of course not without its own problems – the pace of recovery is still very sluggish and unemployment remains extremely high.

The 6.5 percent decline in the S&P 500 since the beginning of the month will also dampen consumer and business confidence. Final University of Michigan consumer sentiment numbers are due for release on Friday and no major revisions are expected. The small but deadly possibility of a Greek euro exit announcement over the weekend could continue to drive investors into the U.S. dollar over the next 24 hours.

RBS, on the other hand, reported (for 24 May 2012 trading):

An early morning spike in EUR/CHF to as high as 1.2076 caught the attention of markets but EUR/CHF subsequently moved back towards the 1.20 floor.

Unsubstantiated reports of a deposit tax in Switzerland went neither confirmed nor denied by the SNB.

Elsewhere, weaker than expected PMIs in Germany and the Euro-area for May weighed on the EUR, which traded down to a new 2012 low of 1.2516 overnight, but during NY hours currencies traded broadly in line with equities as risk-oriented currencies faded vs. the USD into the close.

US treasury yields rose across the maturity spectrum offering modest support for USDJPY, which held in a tight range between 79.35 and 79.65.