Singapore dollar trades at $1.2784 against the greenback

Stronger Asian currencies are trading in a tight range, says IG Markets Singapore.

IG Markets Singapore said:

The Singapore dollar has edged slightly below the $1.28 level this morning as the local currency finds a firmer footing against the greenback.

Last night traders witnessed a fairly lacklustre session which did little to move risk currencies.

An impending EU summit starting tomorrow has been the main focus of attention but expectations are low of any game-changing announcement or plan being launched.

Consequently, stronger Asian currencies are trading in a tight range. The Singapore dollar currently trades at $1.2784 against its US equivalent.

Traders have been less kind to weaker Asian currencies with the Indian rupee failing to lift off its lows after an initiative to increase caps for foreign inflows fell flat on its face.

BK Asset Management meanwhile noted (for 26 June 2012 trading):

The euro ended the day unchanged against the U.S. dollar, which is surprising considering that Europe's problems continue to grow. While Spain had no issue attracting demand for their short-term bills, investors required significantly higher yield to be willing to own Spanish debt.

With interest rates on 3-month bills tripling since May, investors are clearly nervous about being exposed to Spain, even on a short-term basis. Normally this would be terrible news for the euro, but the currency took the results in stride.

The EUR/USD also shrugged off a downgrade of Germany's sovereign debt rating by Egan-Jones, the small but extremely respectable rating agency. At the same time, shockingly brash comments from German Chancellor Merkel and Italian Prime Minister Monti also had very little impact on the euro.

The currency pair's resilience in the face of bad news reflects the lack of interest in one-sided positioning ahead of the EU Summit. In other words, any one who wants to buy or sell euros before the meeting already has their positions on and the rest are waiting on the sidelines until the EU statement is released. 

RBS, on the other hand, reported (for 26 June 2012 trading):

A modestly positive session for equities led to some strengthening among some of the higher-beta currencies. AUD and CAD were notable beneficiaries while EUR/USD chopped within a range as Euro-area headlines hit the wires. USD/JPY was unchanged for most of the session around 79.50.

Ahead of the EU Summit on 28-29 June, we continue to fear disappointment for the aggressive EUR bears. While we doubt there will be meaningful progress at the EU Summit, we also doubt that much progress is discounted by most market participants – "the victory of hope over experience" does not seem large for this Summit.

We continue to believe, however, that the risks remain for an upside surprise for the EUR during the months ahead as the prospect for US QE3 increases and Germany inches closer to some support for periphery financing needs.