Singapore dollar holds steady against the greenback

Having edged down slightly this week from just above the $1.28 mark, the local currency currently trades at $1.275, says IG Markets Singapore.

IG Markets Singapore said:

The Singapore dollar has held steady against the greenback as markets calm down from their recent rollercoaster ride.

While the eurozone crisis is far from over, traders have had less need to panic this week.

Some better-than-expected US data has lifted global markets this week although this has had little effect on the US dollar/Singapore dollar pairing.

It currently trades at $1.275, having edged down slightly this week from just above the $1.28 mark.

Traders are getting weary of the eurozone crisis and attention has briefly turned to China and hopes of a fresh round of stimulus to revive its economy.

This has the potential to boost currencies in the region, if it is announced soon.

BK Asset Management meanwhile noted (for 27 June 2012 trading):

The U.S. dollar traded higher against all of the major currencies with the exception of the Australian and New Zealand dollars.

Stronger U.S. economic data fueled the gains in the greenback and the rise in equities. Durable goods orders in the U.S. rose 1.1 percent last month on higher defense and nondefense aircraft orders. This increase was larger than expected but excluding transportation, durable goods orders rose by only 0.4 percent.

Orders for products made to last more than a few years can be volatile and is usually not a big market mover for currencies but after 2 months of negative durable goods orders, today's report will contribute positively to growth.

Pending home sales also rose 5.9 percent after falling 5.5 percent the previous month. Not only did the rebound erase all of the past month's weakness but it was also the strongest gain in 12 months. While the data is encouraging, there is still not enough improvement to make the Fed less likely to increase stimulus. The monetary policy plans of the Federal Reserve and many other central banks largely depend on the risk premium in the market and developments in Europe.

Over the next 24 hours, the only thing that matters to the dollar is the amount of risk aversion created by the EU Summit - risk on / risk off will determine the direction of the greenback. The final release of first quarter GDP is tomorrow along with the weekly jobless claims report. No major changes are expected, leaving Europe as the market's number one focus.

RBS, on the other hand, reported (for 27 June 2012 trading):

Markets were again quiet ahead of the much-awaited EU Summit, which finally begins tomorrow but we do not expect a formal announcement until the meeting concludes on Friday. Comments from officials from across Europe may continue to shape expectations in the meantime.

Germany's Merkel today fiercely denied talk of Euro-bonds and expressed her disapproval of Van Rompuy's proposals backing joint liability.

At this stage, is it likely that markets are adequately prepared for this weekend's summit to yield a growth effort similar to the one outlined by EU leaders on Friday (EUR 120-130bn) at the EU level, but conditions of austerity at the national level will likely remain and joint liability is not an option for Germany.

If that is the case, the Summit may be viewed as essentially a non-event. Also of note tomorrow, BoE's Weale speaks and as a potential swing voter for QE, his views may be particularly important for future BoE policy expectations.

Finally, in politics, the Supreme Court is expected to decide on the Affordable Care Act, a decision which may have implications for the 2012 electoral scene after a poll today showed the president ahead in three crucial states.