Singapore dollar virtually unchanged

Traders are said to be exercising caution about the global economy’s recovery.

IG Markets Singapore said:

The Singapore dollar is virtually unchanged against the greenback this morning as the US corporate earnings season continues to worry traders.

The local currency is trading in a very tight range as traders exercise caution about the recovery in the global economy.

But by the end of this week we should have a slightly clearer picture of the health of the world’s two biggest economies – US GDP Q3 data is due out on Thursday while HSBC’s flash manufacturing PMI is released tomorrow morning.

Until then Asian currencies are likely to remain subdued. Many are battling the effects of QE3 which is causing local currencies to appreciate against the USD at a time when factory output and trade is suffering.

The Singapore dollar sits at $1.2215 against the greenback this morning. Local traders will also have a keen eye on Singapore inflation figures due out at lunchtime although the MAS has already set its own course for the currency in the short term.

BK Asset Management meanwhile noted (for 22 October 2012 trading):

While the sell-off in stocks show that equity traders remained nervous about the earnings season and the outlook for the financial markets, currency traders are not convinced that tougher times lie ahead.

High beta currencies such as the euro, British pound and New Zealand dollars did not slide alongside stocks and USD/JPY powered higher.

At the same time, FX traders are not blindly optimistic because the Canadian and Australian dollars weakened against the greenback. Investors are still nervous with only 2.5 more weeks to go before the U.S. elections and Chinese leadership change.

Of course, Europe's debt crisis is also a continuing headache for the market. With no major U.S. economic data released today and nothing material expected over the next 24 hours, the most exciting event will be the third and final U.S. Presidential Debate.

While the debate will be focused exclusively on foreign policy, the dramatic contrast in tones of the first and second debate will make this one a session not to be missed.