Singapore dollar stuck in tight range

It remains resilient amidst fiscal cliff fears.

IG Markets Singapore said:

The Singapore dollar is holding its own against the greenback, remaining resilient in the face of fiscal cliff fears.

Last night Senate Majority Leader Harry Reid said “little progress” had been made on averting $600 billion of tax hikes and spending cuts due to kick in at the start of 2013.

This could push the US into recession and provide a major setback for the world economy. Risk assets have been suffering plenty of volatility as a result.

But the local currency has yet to budge from a tight range trading between $1.22 and $1.225 for much of November.

This morning it trades firmly within this band at $1.2234 and it will take a major risk event to see it break this path.

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

The U.S. dollar traded higher against all of the major currencies today as concerns about the Fiscal Cliff return.

Throughout the past week, investors were hopefully that there would be a last minute deal to spare the U.S. economy from falling off the cliff. While this remains a possibility, the outlook is grim following Senate Majority Leader Harry Reid's comment that "little progress has been made."

With less than 5 weeks to go before the end of the year, Congress is running out of time. Yet everyone knows that the stakes are high and while a comprehensive plan to avert the fiscal cliff is not likely, a partial deal that would give lawmakers breathing room to discuss broader reforms in the New Year is still possible.

Some areas of agreement include closing loopholes, limiting tax deductions and extending tax cuts for middle and lower income earnings.