Singapore dollar stays close to $1.28 ceiling; investors flock to safe haven assets
All other currencies, except the yen, are losing ground against the US dollar.
IG Markets Singapore said:
The Singapore dollar remains close to the $1.28 ceiling as eurozone fears remain and keep traders cautious about risk-on plays.
The US dollar continues to see high inflows as investors flock to safe haven assets.
The sentiment is so strong towards the greenback that gold (another traditional safe haven) is losing ground to it.
The downside is that all other currencies, except the yen, are also losing ground against the US dollar.
The Indian rupee has hit an all-time low against the dollar while the Singapore dollar continues to give up territory.
It sits at $1.2786 against the greenback this morning but is showing resistance at $1.28.
GFT meanwhile noted (for 29 May 2012 trading):
The U.S. dollar extended its gains against most of the major currencies.
While it can be argued that worse than expected U.S. economic data kept the dollar in demand for safe haven purposes, the rally in stocks suggests that most investors ignored the weaker reports. This is supported by the fact that the dollar did not gain momentum until Egan-Jones cut Spain’s credit rating.
All of today’s economic releases were second tier which means they have very little impact on monetary policy. The Federal Reserve is focused on unemployment, consumer spending, and Europe’s sovereign debt crisis.
As things currently stand, there is no urgency to ease monetary policy but should Europe’s troubles trigger a deeper sell-off in the U.S. financial markets, the Fed may be forced to stimulate the economy. We strongly believe that their decision about QE3 hinges upon the outcome of the Greek elections and their decision about the euro.