Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
AUD, GBP underperform with US markets closed
The Australin dollar and British pound led the losses yesterday as growth worries in Australia and the UK weighed on markets.
The US markets were closed for a National Day of Mourning in respect for former president Jimmy Carter.
The AUD/USD hit new two-year lows overnight after November retail sales missed expectations. The November sales report was at 0.8% versus 1.0% forecast in a significant miss in what is historically the biggest sales month of the year.
More noteworthy, a meltdown in UK bond markets raised the spectre of another “Liz Truss” movement as the UK ten-year bond yield neared 5.00% for the first time since 2008 as worries grow about the UK’s ability to service its debt.
The GBP/USD fell to the lowest level since November 2023 with GBP lower in most other markets. The GBP/SGD hit one-year lows.
US jobs report expected to show robust December gains
The most important US economic release of the month, the non-farm employment report, is due at 12:30am AEDT.
In December, we anticipate that employment increases will continue high at 180k. According to survey data, the labor situation is becoming better, and we anticipate more growth in the building and retail industries.
Although it stayed at 4.2% in rounded numbers, the unemployment rate probably decreased.
We anticipate a small increase in average hourly earnings of 0.3% month over month, with y-o-y growth remaining constant at 4.0%.
A stronger number could see further gains for the USD.
MAS to ease in upcoming January policy meeting
Based on current conditions, the Monetary Authority of Singapore (MAS) is expected to ease monetary policy in January 2025, though the decision will likely be a close one.
While there are reasons for caution – including trade war uncertainties, strong growth momentum, and exchange rate considerations – the negative impact of tariffs on Singapore’s growth and controlled inflation suggest that easing would be beneficial.
The likely approach will be a modest reduction of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy slope to 1% per annum, which should support sustainable growth and inflation targets.
That said, the upside forecasts for USD/SGD are 1.42 to 1.46 for the 1H of 2025.
Near term key support for USD/SGD is at its 50-day EMA at 1.3465.
Meanwhile, the key support levels for EUR/SGD are at 1.4000 and 1.3962.
Pound pressured after UK gilt meltdown
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 6 – 11 January
All times AEDT
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
