The greenback strengthens against Singapore dollar, reverses broad weakening trend this year

Business Times

29-07-2025

[SINGAPORE] The US dollar (USD) has climbed nearly 1.5 per cent in the past six days, reversing a downward trend that has persisted for much of this year.
The US dollar index (DXY) posted a high of US$109.956 on Jan 13, but gradually weakened throughout the year to a low of US$96.776 on Jul 2.
It reversed the trend in the past six days, climbing to US$98.634 as at Monday (Jul 28) for its highest close since Jul 17. For the year, however, it is still down 10.3 per cent since the high in January.
'We suspect that the broad USD revival is a quiet acknowledgement that tariffs thus far had not affected the US economy as much as feared,' said Maybank in a note on Monday (July 29).
In tandem, most Asia currencies have retreated.
'With the trajectory of the greenback seemingly changing course, most Asian FX are trading on the backfoot with TWD leading in losses, followed by THB,' noted Maybank, referring to the Taiwan dollar and Thai baht. The movements in the Thai Baht took place in the aftermath of the Thailand-Cambodia conflict.
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The Singapore dollar (SGD) is no exception, with the greenback also strengthening against it this month. The USD-SGD currency pair has climbed 0.8 per cent, from S$1.2768 on Jul 23 to S$1.2868 on Jul 28.
As of Tuesday (Jul 29) during Asia afternoon trading hours, it was at S$1.2862. The currency pair is still down around 5.7 per cent year to date, as of Tuesday.
'The US trade deficit is expected to stabilise in June after the blowout in Q1 FY2025 resulting from the frontloading of imports to avoid higher tariffs,' said DBS analyst Philip Wee.
Eastspring Investment analysts also concurred that the easing of front-loaded imports to the US to avoid higher tariffs has eased, but warned that it would lead to 'higher US goods inflation, particularly into Q4, and lower real consumer disposable income.'
Meanwhile, Maybank analysts stated in a note that the USD's rise is a 'quiet acknowledgement that tariffs thus far had not affected the US economy as much as feared', but added that it was 'premature' to assume that the tariffs have no impact on price pressure.
While Wee was positive about the DXY's trend, pointing out that it closed above its 50-day moving average for the first time since February, he also cautioned that US President Donald Trump remains a 'threat' to the independence of the Fed after he stepped up attacks against Fed Chair Jerome Powell.
The next Fed interest rate decision is set to take place this week on July 30.
The DXY tracks the value of the greenback against a basket of currencies which include the euro, yen and British pounds.
'Today, USD could continue to rise, but the major resistance at 1.2900 may be out of reach for now,' said UOB analysts on the USD/SGD rate, adding that 'any pullback is likely to hold above the 'breakout' level of 1.2820.'