The USD/SGD currency pair surged sharply on Tuesday, while rebounding from a seven-week low of 1.3421, in the wake of new US tariff threats and ahead of the outcome of the Federal Reserve’s two-day policy meeting.
US President Trump announced on Monday plans to impose tariffs on imported computer chips, pharmaceuticals and steel in an attempt to encourage domestic production.
“Tariff developments remain fluid and uncertain in terms of timing, magnitude and scope of products. As such, we should continue to see more two-way trades dominate especially after the clean-out of some dollar long positions,” Christopher Wong, forex strategist at OCBC, was quoted as saying by Reuters.
Market focus also sets on the Federal Reserve’s policy meeting for guidance regarding the future interest rate trajectory.
The Fed is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its January 28th-29th meeting. It would be the first pause in the monetary easing cycle, which was initiated in September.
In December, Fed policy makers forecast that inflation would continue moving toward the 2% target, but acknowledged the process could take longer than previously anticipated.
Several policy makers had also expressed concerns that the disinflationary process might have temporarily stalled.
In addition, Fed officials had pointed out that the central bank was at or near the point where it would be appropriate to slow the pace of rate reductions.
On the data front, producer prices in Singapore rose for the first time in five months in December, up 1.5% year-on-year. The increase was driven by a 10.3% surge in machinery and transport equipment costs.
The USD/SGD currency pair was last gaining 0.67% on the day to trade at 1.3527.
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