Singapore’s first-quarter GDP was revised up to 6.0% year-on-year from 4.6%, while the quarter-on-quarter seasonally adjusted reading was lifted to 1.0% from -0.3%. That compared with Bloomberg consensus forecasts of 5.2% and 0.2%, and follows 5.7% annual growth and 1.3% qoq sa in Q4 2025. The expansion was linked to AI-related demand alongside solid construction and services activity, even as the MTI flagged rising headwinds from supply chain disruptions and higher commodity prices, and cautioned that tech firms may pare back commitments.
Price pressures remained contained, with April CPI steady at 1.8% year-on-year versus a 2.1% Bloomberg consensus, and unchanged from March. Fuel and energy inflation accelerated, but non-energy goods and services were broadly stable, indicating limited second-round effects. In markets, USD/SGD slipped 0.2% to 1.2770, with softer crude and a weaker US dollar, yet the pair has stayed rangebound since April between 1.2650 and 1.2840.
Persistent Range in USD/SGD Despite Strong Local Data
Given the strong Q1 GDP report, we see a disconnect where the Singapore dollar is not strengthening as expected. The USD/SGD pair remains firmly stuck between 1.2650 and 1.2840, suggesting the market is weighing other factors more heavily. This tells us that positive local news is currently not enough to drive the currency’s direction.
We believe the government’s official warning of “significant” headwinds is capping the currency’s strength. Recent data supports this caution, as Singapore’s April non-oil domestic exports (NODX) showed a 1.2% month-on-month decline, missing forecasts. This indicates that the exceptional Q1 performance, driven by AI demand, may not be sustainable through the second quarter.
Globally, the US dollar remains resilient due to the Federal Reserve’s persistent “higher for longer” interest rate stance. With US core services inflation still proving sticky around 3.5%, there is little reason to expect a weaker dollar in the immediate term. This external pressure is effectively keeping a floor under the USD/SGD pair.
Implications for Traders and Upcoming Risks
For the coming weeks, this stable range and low volatility present an opportunity for options traders. The 1-month implied volatility for USD/SGD has recently fallen to near 3.5%, a level not seen since late 2024. We see value in selling option strangles, collecting premium while the pair is expected to remain contained within its current boundaries.
We will be watching for any break of the 1.2650-1.2840 range, which could be triggered by a surprise shift in US inflation data. The upcoming US Core PCE Price Index release will be a key catalyst to monitor. Any significant deviation from expectations could quickly invalidate the current range-bound strategy.
