Good day Forex friends! In today’s FX special, I present to you the monthly chart of the US Dollar versus the Singapore Dollar (USDSGD). As you can see, the USDSGD pair has been sloping downwards for quite some time now. Last Friday, however, it was able to cross below the psychological 1.3500 support, marking a new all-time high for the Singapore dollar. With an oversold condition (as indicated in the stochastics), the pair could still rally. Though the long term downtrend line should keep it from rising further. A potential descending triangle could be forming if that scenario occurs. In any case, a clear break below the 1.3500 support could send the USDSGD pair lower by about 4,000 pips! Long SGD anyone?
Last week’s better-than-expected employment and housing figures in the US have sparked some risk taking among investors, causing them to leave the safety of the greenback for the like of the SGD. Singapore is actually a highly developed economy in Asia despite its size which makes it a prime place of investment. Everyone knows about the double digit growth in China but Singapore is actually the fastest growing economy in the world, expanding by 17.9% for the first half of 2010! In any case, some analyst say that the Monetary Authority of Singapore (MAS) would intervene in the market to prevent the SGD’s rapid appreciation in order to protect the country’s export industry which is its main source of revenue. But if risk taking persists, a higher valuation of the Singapore dollar could be very well tolerated.
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