Dollar/Sing

USD/SGD broke below the psychological 1.34 level on Friday afternoon to close at 1.3315. The move down was triggered by a better-than-expected Industrial Production number reported for March. This is the third number in a series of stronger-than-expected data released in the last two weeks which has led to a sell-down of the Dollar Sing from as high at 1.375 in the middle of April. From the charts below, despite having broken through the 38% Fibonacci support of 1.3350, the USD/SGD is also testing the lower range of the descending channel established since mid- March. Looking ahead for the week – in the absence of fresh indicators and data from the domestic front – we may see influence on the Dollar Sing come from the US, in particular from Wednesday’s GDP release and from the FOMC announcement on Thursday.

Oil

Crude has led commodities stronger over the last couple of months, rebounding around 30% off a low in March of around US$42.5. Whilst a firm bottom looks like it has been established here, further upside from here may look limited. So far, this commodity has been led firmer by news and pulses coming from the supply side of the equation which determines the market price. Bears there have been continually forced to cut their short positions around reports of production cuts, lower rig counts and geopolitical worries in the Middle-East. For oil to achieve a ‘next leg-up’, we need to see evidence coming from the demand side of the story. In particular, we would like to see growth indicators suggesting a recovery in demand from various regions of the world’s major economies. However, data from China, Japan and the US released in recent weeks continue to hint at an uninspiring economic environment. Against this backdrop, it will take quite a bit of catalyst for crude to break and push through the Fibonacci US$58.5 on the upside.
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