Singapore dollar threatened by difficult trading week amidst eurozone woes

With investors taking flight to the safety of the US dollar, the local currency currently trades at $1.2756.

IG Markets Singapore said:

The Singapore dollar remains stuck above $1.27 as it starts another potentially difficult week of trading with more eurozone gloom on the horizon.

The local currency has suffered among Asian currencies in the widespread sell-off as investors take flight to the safety of the US dollar.

The Singapore dollar currently trades at $1.2756. It faces difficulty bring it back below $1.27 until more is known about the Greek’s future within the euro.

Along with fears of a Greek exit from the euro, there are big concerns over the health of Spanish banks.

The EU is devising a six-point action plan to help pull the eurozone out of its crisis and stimulate growth.

But in the short-term traders are wary of taking riskier plays on the currency markets with so much uncertainty prevalent.

GFT meanwhile reported (for 25 May 2012 trading):

The U.S. dollar performed extremely well over the past week thanks to better than expected economic data and risk aversion. In fact, it has been a great month to be long dollars.

The greenback is up more than 7 percent against the New Zealand dollar, 6 percent against the Australian dollar and 5 percent against the euro and Swiss Franc.

While some investors would argue against the quality of U.S. assets, with the eye of the storm in Europe, Treasuries look like diamonds in comparison.

Another piece of better than expected U.S. economic data has lent support to the dollar, which traded slightly higher against the EUR, GBP, CHF and JPY on Friday.