USD/SGD pushed above 1.29 after a strong US nonfarm payrolls release, while the S$NEER was still trading well above its mid-point. The move followed a choppy sequence in which the pair briefly traded above 1.2855, then dipped to 1.2828 before jumping during the early New York session to 1.2913. Momentum was described as strong, keeping attention on a test of the year-to-date high near 1.2930, with 1.2960 viewed as a higher resistance level.
On the 24-hour view, the pair was said to need to hold above 1.2870 to sustain the advance. Over a 1–3 week horizon, earlier reference points included spot at 1.2785 on 2 June, the need for a close above 1.2810, and a subsequent close at 1.2841, with spot at 1.2835 on 4 June. The upside focus was placed on 1.2960, while the constructive view was conditioned on support at 1.2830, with 1.2855 framed as firm near-term support; 1.2800 had previously been cited as “strong support”.
Drivers Of The Recent USD/SGD Surge
Following last Friday’s surge past 1.2900, we see continued strength in the US dollar against the Singapore dollar. The unexpected jump was fueled by a blowout US jobs report, creating strong upward momentum. This suggests the path of least resistance is higher in the immediate term.
The recent report showed the US added 295,000 jobs in May, crushing consensus estimates of 185,000 and pushing US Treasury yields higher. This has dramatically shifted interest rate expectations, with the CME FedWatch Tool now indicating less than a 10% chance of a rate cut before the fourth quarter. This fundamental backdrop supports a stronger US dollar.
Implications For Trading And Policy Outlook
For derivatives traders, this points to buying USD/SGD call options with strikes targeting the year-to-date high near 1.2930. Should that level break, our focus shifts to the next significant resistance at 1.2960. We will maintain this positive view as long as the pair holds above the 1.2830 support level.
Our confidence is bolstered as long as immediate momentum is maintained above the 1.2870 mark. The 1.2855 level should now be considered a firm support floor for any minor pullbacks. These levels are critical for structuring positions like selling out-of-the-money puts to take advantage of the bullish trend.
This price action reminds us of the 2022 tightening cycle, where consistently strong US economic data led to a sustained rally in the dollar. While we do not expect the same magnitude, the current dynamic of a robust US economy against a backdrop of global uncertainty is similar. This historical precedent suggests the current trend could have legs for the next few weeks.
We also note that the Singapore dollar’s trade-weighted index, the S$NEER, remains well above the mid-point of its policy band. This indicates the Monetary Authority of Singapore has ample room to tolerate this current pace of SGD weakness. Therefore, we do not expect any policy action that would stand in the way of a move towards our 1.2960 target.
