Singapore dollar trades at $1.2632

The Singapore dollar has lost the ground it gained after better-than-expected China manufacturing data lifted Asian currencies, says IG Markets Singapore.

IG Markets Singapore said:

The Singapore dollar has lost the ground it gained after better-than-expected China manufacturing data lifted Asian currencies.

Yesterday’s HSBC flash estimate of PMI manufacturing activity showed an improvement, breaking a seven-month downward trend.

While still showing contraction, the rate of shrinkage has slowed and raises hopes the Chinese economy has bottomed out.

This optimism lifted the Singapore dollar against the greenback although it has since slipped back down to trade at $1.2632 this morning.

Sentiment is still low towards risk assets with Spain and Greece continue to panic traders.

BK Asset Management meanwhile noted (for 24 July 2012 trading):

Once again the U.S. dollar held steady or traded higher against all of the major currencies except for the Japan Yen. Fear and uncertainty continues to drive investors into safe haven currencies and to the dismay of Japanese officials, the Yen is still the market's preferred safe haven trade and as a result, the currency rose against the dollar for the fifth consecutive trading day.

The U.S. only released second tier economic data this morning. According to the reports, the Richmond Fed manufacturing index dropped sharply in the month of July, printing at -17.3 from -0.86 the previous month. This is the weakest reading in the more 3 years and another sign of slower growth in the U.S. economy.

House prices on the other hand rose 0.8% in May, which is consistent with the gradual recovery reported in the Beige Book. New home sales are due for release tomorrow and after strong gains in May, slower growth is expected. In fact given the sharp decline in existing home sales last month, we would not rule out the possibility of a decline in the sales of new homes.

Treasury Secretary Geithner is also scheduled to deliver the annual report of Financial Stability Oversight Council to a hearing of the House Financial Services Committee. There is a Q&A session, which means that Geithner could be asked tough questions about his role in halting the abuses of LIBOR.