USD to SGD exchange rate spikes up as Singapore prolongs 'circuit breaker'
The USD rose above S$1.43060 against the Singapore dollar on Tuesday, as Singapore extended its 'circuit breaker' period to 01 June in a bid to contain the coronavirus pandemic.
The USD/SGD forex pair is testing 23 March 2020 peak levels once again, with the USD rising sharply against the SGD to S$1.43060 as at 17:20 on Tuesday 21 April, based on IG trading data.
The reverse perspective has the SGD to USD exchange rate at S$1.0000 to US$0.6996, according to Bloomberg.
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Singapore extends 'circuit breaker' measures; oil prices crash
On Tuesday, the USD rallied 0.37% shortly after Singapore’s Prime Minister Lee Hsien Loong announced an extension of the country’s coronavirus 'circuit breaker' containment measures by four more weeks to 01 June 2020. The first 'circuit breaker' was due to end on 04 May 2020.
The safe-haven greenback also rallied against the SGD as oil price futures plunged to their lowest levels since May 2003 at around the same time. WTI crude and Brent crude each fell around 25.6% and 13.3% to US$16.15 and US$24.35 per barrel respectively as at 18:15 SGT on 21 April 2020, based on IG oil futures trading data.
The oil price drops came as oil producers ran out of storage space in the face of a demand wipe-out, forcing them to pay traders to buy the oil from them, rather than pay heftier storage charges.
With volatility also on the rebound again – IG’s Volatility Index (VIX) has risen over 14% in the last 36 hours, all signs are pointing towards a fresh wave of boosts for safe-haven assets like the US dollar and gold. Gold futures prices are up 0.31% as at 19:00 SGT on 21 April 2020.
On 23 March 2020, the USD had rallied to an 11-year high against the Singapore dollar, hitting S$1.46439, following the break out of tensions between Saudi Arabia and Russia over oil prices and supply, as well as the US government’s delay on approving a coronavirus fiscal stimulus package.
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USD has to stay above 1.4280 for bull case to remain in tact
UOB FX analysts had written in a note posted earlier on Tuesday that despite the currency pair dipping below 1.4200 on Monday, the mild downward momentum has hardly improved.
Their bear case for the USD/SGD on Tuesday was that the USD could drift lower, with a break of the strong support at 1.4160 appears unlikely. On the upside – the bull case, they said the US dollar would have to move back above 1.4280 (minor resistance is at 1.4260) in order to indicate that the current mild downward pressure has eased.
Their prediction for the next few weeks is that the pair has to move and stay above 1.4280 within these few days. Otherwise, any prospects for a stronger rebound to 1.4380 would diminish.
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