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US Dollar Steady Amid Fed Signals and Economic Data Anticipation

2024-12-03 10:44:42.825000

The USD/SGD currency pair has entered a consolidation phase in the afternoon Asian session, as trading activity is thin due to holidays in the U.S. and Japan. Analysts from Maybank anticipate two-way trading and a potential bullish retracement of the greenback. Currently, USD/SGD is trading at 1.3404, slightly higher than Wednesday's closing price of 1.3400.

The U.S. dollar remained steady after a strong start to the week, despite pressure on the euro due to concerns over a potential collapse of the French government. The Manufacturing ISM index has shown signs of contraction, but stronger new orders indicate a modest recovery. John Williams, President of the Federal Reserve Bank of New York, hinted at potential rate cuts while emphasizing a data-dependent approach. In contrast, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, suggested that rate cuts may not be necessary. Market expectations are currently pricing in a 25-basis-point cut at the next Fed meeting, but many anticipate a hold in January.

The USD/SGD recovered from daily lows and is trading with slight gains. The cautious posture of the Federal Open Market Committee (FOMC) and strong US Manufacturing and Services PMI figures have influenced the pair's movements. The US saw an uptick in manufacturing and services PMI data, with May's S&P Global Manufacturing PMI increasing to 50.9 and the services PMI accelerating to 54.8. Strong Jobless Claims figures suggest a resilient US economy, justifying the delay of rate cuts by the Fed. US Treasury yields have risen, signaling that markets are delaying the start of the easing cycle. The CME FedWatch Tool indicates that the odds of a rate cut in September have declined. Next week, the US will release April's Personal Consumption Expenditures (PCE) data. Technical analysis shows that the USD/SGD is treading in negative territory but a recovery is seen, suggesting that buyers are gaining ground. The light economic calendar includes private employment data and Fed officials' speeches, and upcoming key economic indicators could heighten volatility.

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