Singapore dollar trades at $1.2313

The US dollar barely changed against major currencies as many traders still exercised caution.

IG Markets Singapore said:

The Singapore dollar did very little overnight against the US dollar despite plenty of macroeconomic action.

The US continues to be the bearer of good news with more upbeat data about the health of the world’s largest economy.

But the greenback barely changed against major currencies as many traders still exercised caution about weak factory output from other major economies.

This wariness stopped traders shifting out of the USD and into rick currencies, especially Asian ones where demand is slowing demand for exports.

The local currency trades at $1.2313 this morning with the next event likely to affect the pair coming tonight with Fed minutes from the September meeting.

BK Asset Management meanwhile noted (for 3 October 2012 trading):

The European Central Bank's OMT program provides a backstop to Europe but its activation is contingent upon the request of a nation. In other words, the program is obsolete until a country (ahem, Spain) asks for help.

At the same time, the central bank is faced with growing evidence of weaker growth. According to this morning's PMI numbers, service sector activity in the Eurozone continued to contract with a deeper than initially reported slowdown in Germany and France.

While the euro is still trading above its pre-OMT levels, the price action in European assets since the ECB's announcement has been far from desirable. What we will be listening for in ECB President Draghi's speech tomorrow is whether he feels the slowdown in growth and the market's reaction to OMT is enough to warrant further action.

We don't believe that the central bank will ease again without giving the market time to digest the OMT program. Some analysts believe the ECB could cut interest rates and while we think a rate cut or another LTRO is possible, it is just far too early for another move.

This does not mean that Draghi won't be dovish - he probably will, but how far he will go in terms of signaling additional action will determine how the euro trades.