The USD/SGD price retreated on Friday after the relatively strong Singapore industrial production data. The pair fell to 1.3395, which was about 0.65% below the highest level this week.
Singapore industrial production
Singapore’s economy has staged a strong recovery, helped by strong domestic and external demand. The country has also benefited from the movement of companies from Hong Kong after the city embraced the security law.
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Data published by Singapore Statistics showed that industrial production rebounded in May. The production rose by 7.2% in May after falling by 0.4% in the previous month. This increase was better than the median estimate of a 0.9% decline.
Industrial production rose by 30.0% on a year-on-year basis, a better performance than the median estimate of 23.6%. This annualised increase was mostly because production declined sharply last year amid the pandemic.
All industrial sectors in Singapore increased in May. Precision engineering rose by 58.6% while transport engineering rose by 44%. Biomedical manufacturing and general manufacturing rose by 35.6% and 27.8%, respectively. The same trend happened in the services sector.
Recent data from Singapore have been positive also. For example, retail sales have risen while consumer prices rose by 2.4% in May.
Looking ahead, the USD/SGD pair will react to the US personal income and spending data from the US that will come out during the American session. Economists expect the data to show that incomes declined by 2.5% in May after falling by 13.1% in the previous month. At the same time, they expect spending to increase by 0.4%.
The US will also publish the latest personal consumption expenditure (PCE) data, which is the Fed’s best measure of inflation. Analysts expect the core PCE rose by 3.4% in May. Still, the Fed believes that the ongoing inflation increase is transitory.
The USD/SGD price rose to a high of 1.3481 this month. This was the highest it had been since March 31. The pair formed a double-top at this point and then broke out lower this week. It has moved below the 25-day moving average and is slightly above the Ichimoku cloud.
It also fell below the neckline of the double top pattern.The Relative Strength Index (RSI) has moved from the overbought level of 75 to 45. Therefore, I suspect that the pair will keep falling as bears target the next key support at1.3380, which was the previous double-top level.
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