SINGAPORE: Singapore Dollar came under selling pressure against their US counterpart towards the end of last week. Hawkish Fed commentary from Board of Governors member Lael Brainard helped push local bond yields higher . Simultaneously, the S&P 500 declined. This kind of trading environment also didn’t bode well for some other sentiment-linked ASEAN bloc currencies.
With the markets appearing to refocus on monetary policy developments out of the US again, the incoming week could bring with it more on this front. On Friday, we will get the first estimate of US GDP for Q1. The annualized rate of growth is expected to slow to 2.0% q/q from 2.9%. Keep in mind that data out of the country has been tending to underperform since this month began.
This opens the door for a downside surprise and may present a problem for the greenback. With Fed policymakers giving positive outlooks on the economy, they consequentially set higher expectations for incoming economic statistics. If the GDP figures do disappoint, then the Malaysian Ringgit and or the Philippine Peso might benefit from US Dollar weakness as a result.
Keep an eye out for how risk trends continue to unfold as well. A catalyst for these might come from more US earnings (Alphabet/Google is due on Monday). French President Emanuel Macron will be visiting the to meet with Donald Trump . On Wednesday, leaders of the ASEAN member states begin a summit that goes through April 28 th . The former two might address topics such as global trade and tariffs.
Outside of the world’s largest economy, Hong Kong’s March trade balance report could spike some volatility in currencies like the Singapore Dollar. This is because its associated country has a key trading relationship with Hong Kong. According to the World Bank, the latter was a destination of about 12.61% of Singapore exports. If imports rise in HK on Thursday, which they are expected to by 5.2% y/y, then that may bode well for the Singapore unit.
