Singapore dollar retreats against US dollar

FX markets are expected to trade in tight ranges as traders wait for fresh leadership and direction from this week's EU Summit, says IG Markets Singapore.

Here’s more from IG Markets Singapore:

The Singapore dollar retreated by around 70 points against the greenback since FX markets opened for trading this morning.

USD/SGD is at its one-week high, once again revisiting the 1.28 level, and trading just above this level currently.

The US dollar, a perceived safe haven, gained last week against major currency pairs. This morning it continues to hold on to those gains ahead of another European summit in Brussels, which starts on Thursday.

FX markets are expected to trade in tight ranges as traders wait for fresh leadership and direction from this week's EU Summit.

The headline risk out of Europe is once more taking hostage of the markets and traders' behaviour. Investors are hoping for more meaningful action to resolve the euro crisis rather than just more talk from the politicians.

RBS meanwhile noted (for 22 June 2012 trading):

G10 currency pairs stayed in relatively tight ranges to end the week even as equities finished the session positive.

The CAD did recoup some recent losses versus the USD and shook off a disappointing CPI report but US/CAD still remained above 1.02 and USD/JPY remained above 80 the entire session.

AUD and NZD also strengthened versus the USD but again the pairs remained below the levels seen earlier in the week.

Looking ahead next week, the 28-29 June EU Leaders Summit will likely command the most attention and European leaders have already mentioned rough details of a growth plan that could emerge from the summit.

With such details already emerging, though, optimism for any more solutions to emerge could fade ahead of the summit.

BK Asset Management, on the other hand, reported (for 22 June 2012 trading):

The U.S. dollar traded lower against all of the major currencies with the exception of the British pound, which was held back by this week's softer economic reports and the prospect of more stimulus from the Bank of England.

The main take away from this week's U.S. economic reports, FOMC meeting and comments from the Federal Reserve is that the Fed is prepared to ease. Weaker economic data hardened the case for QE3 as the cracks in the manufacturing sector, housing and labor markets become more evident.

While the dollar ended the week higher against most of the major currencies, the need to adjust QE3 expectations should cap near term gains in the greenback. The extension of Operation Twist should be the first step to easier monetary policy from the Fed.

In the coming week, Europe will be the main focus, which means that risk appetite will determine the trend of the dollar. With that in mind, there are a few pieces of U.S. data worth watching including new home sales, consumer confidence, durable goods orders, pending home sales, revisions to first quarter GDP, personal income, personal spending and Chicago PMI.

Given this week's economic reports, the decline in confidence reported by the University Michigan consumer sentiment survey and the decline in retail sales, we expect these reports to be negative for the dollar by reinforcing the need for QE3.