Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Fed holds neutral tone amid CPI focus
The USD remained under pressure as Fed Chair Powell maintained a balanced stance in his Senate testimony, emphasizing no urgency to adjust policy.
The USD index trended lower with markets awaiting crucial January CPI data due Thursday at 0030 AEDT.
The AUD was a standout performer after Trump-Albanese discussions suggested potential tariff exemptions for Australia, with AUDUSD finding broad demand.
In Asia, focus turns to China’s implementation of 10-15% tariffs on US goods.
Dollar shrugs off temporary claims distortion
US initial jobless claims will be released this Friday. This week, initial and continuing claims both increased somewhat.
Since California was responsible for almost half of the rise in the national total, some of the increase in ongoing claims can be ascribed to wildfires in the state.
In the upcoming weeks, claims may remain low due to the waning impacts of auto industry layoffs and a slow reversal of the wildfire impact.
Amid a surge in market uncertainty over policies, the dollar has underperformed in the G10 since its inauguration.
Although the road ahead is uncertain, we are nevertheless positive on the dollar index.
SGD outlook murky despite GDP upside
As a result of a 7.4% increase in industrial production (IP) in Q4, which significantly outpaced the manufacturing sector’s 4.2% growth in the flash estimate, we anticipate Singapore’s Q4 GDP growth will be revised up to 5.0% year over year from the advance estimate of 4.3%.
During the global IT upcycle, semiconductors led the stronger-than-expected IP pickup.
In January, the MAS shocked us by softening the slope.
A further increase in international tariffs would have a detrimental effect on H2 growth and possibly result in another easing of the S$NEER policy band later this year.
USD/SGD now sits on 50-day EMA key support of 1.3523 and USD buyers may look to take advantage.
Antipodeans retreat
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 9 – 15 February
All times AEDT
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*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.
