And this rally is far from over, with SGDUSD breaking through the 200-day moving average and the 50-day average, which hints at a continued bullish trend. According to Fitch, this trend is supported by continued uncertainty in the US over a contested Presidential election in November and rising Covid-19 cases numbering in the tens of thousands, with political gridlock hindering an effective response to the outbreak.
With Phase 3 of Singapore’s Covid-19 lockdown easing measures due for year-end as community spread holds steady at single digits, Fitch Solutions sees the Singapore Dollar (SGD) strengthening against the US Dollar amid a worsening pandemic situation and an uncertain presidential election. It has revised its 2021 FX forecast to $1.3700/US$ from $1.3800/US$.
“Over the short term (next three to six months), we see more room for the SGD’s rally to run given a bullish technical outlook and the contrasting situations in the US and Singapore,” remarks the research house in a report issued on 23 October. The SGD broke resistance at $1.38/US$ on July 27 and traded stronger ever since, averaging at around S$1.3662/US$. Fitch Solutions has revised its 2020 average exchange rate outlook from S$1.3850/US$, from S$.3950/US$.
