USD/SGD has been recovering after earlier losses triggered by US tariff headlines. The rebound comes as risk appetite weakens and markets scale back expectations that the Monetary Authority of Singapore (MAS) will tighten policy in April.
Singapore’s headline CPI rose 1.4% year over year, in line with forecasts. Core inflation slowed to 1.0% year over year, mainly due to softer services inflation.
Mas Policy Expectations Shift
The weaker core inflation print has lowered expectations for MAS tightening in April. The base case now is that MAS holds policy steady in April and watches upcoming inflation data.
The article was produced using an AI tool and reviewed by an editor.
We are seeing a reversal of last year’s trend, when expectations for MAS tightening had been fading. The unexpected drop in core inflation in 2025 strengthened the view that MAS would keep policy unchanged.
However, the January 2026 data changed the picture. Core inflation jumped to 3.1%, well above forecasts, and put MAS tightening firmly back in focus.
This return of inflation pressure has reshaped market sentiment ahead of the April 2026 meeting. Last year, the market was pricing out any move. Now, overnight index swaps suggest more than a 70% chance that MAS will re-center its policy band higher. This is a major shift from the dovish view that dominated much of 2025.
Usd Outlook And Trading Implications
On the US side, the economy is still strong. The latest labor report showed job growth of more than 250,000, keeping the Federal Reserve on a hawkish track. This differs from parts of 2025, when slowdown fears sometimes weighed on the dollar. Now both central banks may be leaning tighter, creating a more complex trading setup with more potential opportunities.
For derivatives traders, this points to implied volatility in USD/SGD options as a possible opportunity, especially for contracts expiring around the April MAS meeting. If the Singapore dollar strengthens, strategies such as buying USD/SGD put options or using put spreads may offer a way to position for a hawkish MAS surprise. Option prices may still reflect some of the earlier, more dovish expectations.
Still, global risk sentiment matters. A sharp flight to safety could lift the US dollar broadly and overwhelm local drivers. Because of that risk, defined-risk approaches (like spreads) may be preferable to positions with unlimited risk, such as naked shorts. Monitoring equity market volatility will be important for managing this risk.
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