Singapore dollar expected to strengthen as China’s net purchases of US bonds turn negative.
For the first quarter of 2011, China openly supported EU bonds over US government debt.
Here’s more from DBS:
Asia woke up this morning to read that Fed Chairman Ben Bernanke hurt the US dollar when he did not signal any plans to further loosen monetary policy to aid the “frustratingly slow” US economic recovery. Then again, one cannot help but wonder if the dollar would have reacted positively if he did. At least, the US stock market wouldn’t have reacted as negatively as it did, in spite of Bernanke’s pledge to keep monetary policy accommodative. Against this background, the market appears to be looking past the Greece debt crisis and holding on to their euros. What the dollar bears need now is for ECB President Jean-Claude Trichet to signal a July hike at tomorrow’s ECB meeting.
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