USD/SGD: Bullish momentum fades – OCBC

S$NEER continued to ease; last at 0.9% above model-implied mid. Looking back, SGD has been easing since Oct-2024 on trade-weighted terms even as MAS maintained policy status quo. Pair was last seen at 1.3431.

Signs of some degree of bearish pullback in the near term

“That said, SGD remains stronger vs. peers in the basket but it is just less strong today (vs. than for most of the year). Historically the positive correlation between the change in S$NEER and MAS core inflation shows that SGD strength can ease when core inflation eases materially. Monday’s release of CPI report saw both headline and core CPI surprised to the downside. The sharp pullback has also led to chatters if MAS would ease soon at the next MPC in Jan-2015.”

“We think there is no hurry to ease amidst many moving parts – tariff threats, geopolitics – which may see price pressures return. MAS is better off monitoring further to avoid any risk of flip-flopping on policy. MAS maintaining policy status quo suggests that SGD can still remain somewhat resilient on trade-weighted terms. At some point in 2Q or 3Q in 2025, MAS may ease policy if core CPI does ease further.”