USD/SGD forms a descending triangle after Singapore GDP data

The Singapore dollar continued strengthening against the US dollar after the latest GDP and trade numbers. USD/SGD is trading at 1.3430, which is about 2.3% below the highest level in December last year.

Singapore GDP data

Singapore’s economy did well in the fourth quarter even as the country battled the new Covid-19 wave. The economy expanded by 6.1% on a quarter-on-quarter basis. That was a better reading compared to the previous estimate of 5.9%.

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As a result, the economy grew by 10.7% on a year-on-year basis, which was in line with the previous estimate. The statistics agency attributed this performance to strong consumer spending and exports. For 2021, the economy rose by 7.6%, which was also higher compared to the previous estimate of 7.2%.

Meanwhile, Singapore’s non-oil exports jumped sharply in January. They rose from 2.6% in December to 5.0% in January. Consequently, these numbers rose by 17.6% on a year-on-year basis. Most of these exports were to its Southeast Asian partners.

The USD/SGD has been in a bearish trend lately as investors expect more growth from Singapore. Another reason is that Singapore’s monetary authority, which acts as the central bank, has embraced a more hawkish tone than expected. 

Two weeks ago, the bank caught many people off-guard when it decided to implement an out-of-cycle tightening in its battle against inflation. It did that by raising the rate of appreciation of its policy band. That was the first time since 2015 that MAS decided to implement an out-of-cycle action. In 2015, it intervened and eased policy as oil prices collapsed.

The USD/SGD also declined even after the Fed delivered the latest minutes. The bank’s officials signaled that they will accelerate their tightening in the coming month.

USD/SGD forecast

The daily chart shows that the USD/SGD pair has been in a strong bearish trend in the past few days. Along the way, the pair has formed a bearish descending triangle pattern that is shown in blue. It is now hovering slightly above the lower side of this triangle pattern.

The pair has also declined below the 25-day and 50-day moving averages while the MACD and the money flow index (MFI) are tilting lower. Therefore, the pair will likely have a bearish breakout in the next few days.