Currency Briefing - what you need to know for Tues May 15, 2012
The local currency sits at $1.2577 against the US dollar amidst negative market sentiment.
IG Markets Singapore said:
The Singapore dollar is losing ground against the greenback as market sentiment takes another nosedive over concerns over a messy Greek exit.
Global equities suffered another day of carnage yesterday as Greek politicians failed to form a coalition government.
Risk-on sentiment is temporarily in hibernation as traders head for safe havens such as the US dollar and German bunds.
The local currency sits at $1.2577 against the US dollar as Asian currencies suffer in the flight to safety.
The continued Greek fallout and fears for the future of the eurozone are likely to keep the Singapore dollar trading above $1.25 during this period.
The Greenback is strengthening against all major currencies, not just the Singapore dollar, rising to new highs against the euro.
RBS meanwhile noted (for 14 May 2012 trading):
Overnight developments weighed on risk assets and the USD rallied against the majors to start the week.
Greece was unable to form a unity government today and party leaders will hold a meeting tomorrow. Today the Euro-area GDP releases and RBA minutes will probably take centre stage.
The RBA May meeting minutes will likely echo the recent RBA Statement on Monetary Policy while the Euro-area 1Q first estimate of GDP could show a second consecutive quarterly contraction, though at this point a technical recession in 1Q is likely priced into the market.
Germany and France also release 1Q GDP growth estimates. We hold core EUR downside exposure and still expect further weakness as disappointing growth data and softening commodity prices pave the way for eventual ECB policy easing.
In the US, weakness in the energy index will likely keep headline CPI flat, though the core figure could rebound following an unusually soft gain in February. Retail sales in the US are expected softer, though an early Easter holiday and warmer-than-usual weather could have depressed the readings.
For CPI and retail sales, a likely negative drag on gasoline prices due to seasonal adjustments could weigh on both releases.