Forex Market: USD/SGD trading forecast for Monday

Friday’s trade saw USD/SGD within the range of 1.2472-1.2498. The pair closed at 1.2495, losing 0.01% on a daily basis, while gaining 0.32% for the whole week.

Fundamental view

United States

Activity in US services sector probably slowed down in August, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 59.9, according to the median forecast by experts. In July the PMI stood at 60.8. The index is based on a monthly survey, encompassing 400 business entities, operating in the services sector. Respondents give their estimate in regard to business conditions – sales, employment, inventories, prices. Values above the key level of 50.0 indicate optimism (expanding activity). As services comprise a dominant part of nations GDP, the performance of this indicator is of key importance for overall economic development assessment. Higher PMI readings would support the national currency. The preliminary data by Markit Economics is due out at 13:45 GMT on Monday.

Sales of new single-family houses in the United States probably reached the seasonally adjusted annualized level of 425 000 in July, following a level of 406 000 units in June, as the latter was 8.1% lower compared to that in May. The median sales price of new houses sold in June was $273 500, while the average sales price was $331 400. The seasonally adjusted estimate of new houses for sale at the end of June was 197 000, which represents a supply of 5.8 months at the current rate of sales.

The report on new home sales has a considerable impact on financial markets, as new home sales can trigger a rise in consumption. It is also an excellent indicator of any economic downturns or upturns due to the sensitivity of consumer income. For example, when new home sales drop over several months, this usually is a precursor to an economic depression.

However, there are several points to watch out for, when interpreting the New Home Sales numbers. First, the statistics does not record any houses that are not going to be sold immediately. For example, the case, when a house is commissioned to be built on an existing plot of land that the purchaser owns.

Second, the statistics are taken at the point, where a customer has signed a sales contract or has put a deposit down. At this point, the house can be at any stage of construction.

Third, the sales figures are not adjusted to take into account sales contracts, which are eventually canceled by the builder or the customer. However, the same house is not included in any subsequent count, when it is eventually sold to another customer.

Higher than expected rate of increase in the new home sales index is usually dollar positive. The Census Bureau is scheduled to publish the official data at 14:00 GMT on Monday.

Singapore

At 5:00 GMT on Monday Statistics Singapore is to release the CPI report for July. In June the annualized index of consumer prices dropped to 1.8%, or the lowest level since March, from 2.7% in May, mostly because prices of automobiles rose at a more moderate rate. Private road transport costs increased 2.8% in June, a more modest increase in comparison with the 8.1% climb in May, mostly because of the sudden correction in Certificate of entitlement premiums in May, according to the Ministry of Trade and Industry. Costs of accommodation increased at a pace of 0.5% in June, following a 0.9% surge in the prior month, as imputed rentals on owner-occupied accommodation rose more moderately. Food prices were 3.2% higher in June this year compared to June 2013, after annualized food inflation was reported at 3.0% in May.

Key categories in Singaporean consumer price index are Housing (accounting for 25% of total weight) and Food (22%). Other categories include Transport (16%), Education (7%), Health (6%), Communication (5%) and Clothing and footwear (3%). Recreation, alcoholic beverages, tobacco and a number of other categories comprise the remaining 16% of the index.

In case the CPI continued to decelerate, this would mount selling pressure on the local currency.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2488. In case USD/SGD manages to breach the first resistance level at 1.2505, it will probably continue up to test 1.2514. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2531.

If USD/SGD manages to breach the first key support at 1.2479, it will probably continue to slide and test 1.2462. With this second key support broken, the movement to the downside will probably continue to 1.2453.

The mid-Pivot levels for Monday are as follows: M1 – 1.2458, M2 – 1.2471, M3 – 1.2484, M4 – 1.2497, M5 – 1.2510, M6 – 1.2523.

In weekly terms, the central pivot point is at 1.2487. The three key resistance levels are as follows: R1 – 1.2536, R2 – 1.2578, R3 – 1.2627. The three key support levels are: S1 – 1.2445, S2 – 1.2396, S3 – 1.2354.