Forex Market: USD/SGD forecast for Monday

During Friday’s trading session USD/SGD traded within the range of 1.2476-1.2512 and closed at 1.2511, gaining 0.26% for the day, while losing 0.06% for the week.

Fundamental view

United States

The New York Empire State Manufacturing Index probably fell to a reading of 15.70 in June, according to the median estimate by experts, from 19.01 in the prior month. The index is based on the monthly Empire State Manufacturing Survey, which is conducted by the Federal Reserve Bank of New York. About 200 top manufacturing executives respond to a questionnaire, sent out during the first day of the month. They provide their estimates in regard to the performance of several business indicators from the prior month, while also forecasting performance during the upcoming six months.

The ”general business conditions” component of the index is based on a distinct question, posed on the Empire State Manufacturing Survey, thus, it is not a weighted average of the other indicators. These indicators, which are only applicable to the manufacturing facilities of survey respondents in the region of New York, include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, number of employees including contract workers, average employee work week, technology spending and capital expenditures. The general business conditions component and the sub-indexes for the 11 indicators are calculated by subtracting the percentage of respondents, rating an indicator as ”lower” (a drop), from the percentage of respondents, rating the same indicator as ”higher” (an increase).

In case 33% of survey respondents stated that business conditions had improved during the current month, 50% stated that conditions had not changed, and 17% of the respondents stated that conditions had deteriorated, the index would have a reading of 16. Readings above 0.00 are indicative of improving business conditions in the region. Higher than anticipated readings would certainly boost demand for the US dollar. The Federal Reserve Bank of New York is expected to release the official results from its survey at 12:30 GMT on Monday (June 16th).

Industrial production in the United States probably expanded 0.5% in May compared to April, according to the median forecast by experts, after shrinking 0.6% in April in comparison with March. The index of industrial production reflects the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities in the United States. The index is sensitive to consumer demand and interest rates. As such, industrial production becomes an important tool for future GDP and economic performance forecasts.

Those figures are also used to measure inflation by central banks. For instance, extremely high levels of industrial production in a booming economy may lead to uncontrolled levels of consumption and rapid inflation. Industrial output is a coincident indicator, which means that changes in its levels generally echo similar shifts in overall economic activity. In case production increased more than projected, this would certainly heighten the appeal of the dollar. The Board of Governors of the Federal Reserve will release the official figure at 13:15 GMT on Monday.

Technical view

According to Binary Tribune’s daily analysis, in case USD/SGD manages to breach the first resistance level at 1.2523, it will probably continue up to test 1.2536. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2559.

If USD/SGD manages to breach the first key support at 1.2487, it will probably continue to slide and test 1.2464. With this second key support broken, the movement to the downside will probably continue to 1.2451.