by Jon Beddell
Foreign Currency Market Update – Sterling / Signapore Dollar
The Singapore dollar rallied with other Asian currencies yesterday as traders anticipated a possible rescue package for Greece, the heavily debt stricken economy. Sterling also benefitted from the developments, helping the exchange rate rebound from the key support at 2.20. This level was the low in October 2009, and also a key level in May. A close below there would be a negative development for sterling, signalling further downside.
The Singapore central bank is widely believed to be likely to intervene if the currency rises too much against the US dollar. The dollar/Singapore rate is 1.41, and intervention is only expected if SGD rises to push the exchange rate below 1.40. However, this should not be relied upon, as the rate did trade as low as 1.38 in November.
The technical outlook is negative. We are still trading above the key 2.20 support, but the trend is down, suggesting that a break of that level is likely at some point in the near future. It would take a break above 2.28 to end the downtrend and turn the outlook positive.
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