CPI in focus – OCBC

USD/SGD continued to trade in a tight range near recent lows. The pair was last at 1.2885, note OCBC FX strategists Frances Cheung and Christopher Wong.

SGD to continue to stay strong

“Daily momentum is steady, while RSI has risen. Rebound risks are not excluded in the short term. Support here at 1.2870. Resistance at 1.30 (21 DMA), 1.31 levels. S$NEER was last estimated at ~1.88% above our model implied mid, with the model implied spot lower bound at 1.2895.”

“The core CPI for August was re-accelerated. For the first 8 months of the year, the base CPI is 3%. This may suggest that it is premature for the MAS to ease the policy stance at the October MPC, unless the MAS switches from inflation-fighting to growth-supporting mode.

“SGD strength may continue to stay with us for a bit longer, especially if USD softness continues.”