FX Daily: AUD, THB and SGD near resistance levels

RBA might delay taper, BOT closer to rate cut
Philip Wee07 Sep 2021
    Photo credit: Unsplash Photo

    AUD is near the top of its 0.70-0.75 range.According to our model, AUD is likely to be capped around 0.7510 or two standard deviation from its mean trend value. The Reserve Bank of Australia might, at its meeting today, defer its decision to taper asset purchases to AUD4bn/mth from AUD5bn. The Australian economy is expected to contract in 3Q from the strict lockdowns to contain its most serious wave of infections. A double-dip recession is possible if 70% of the population are not fully inoculated by late October or early November, a condition for reopening the economy. 


    THB depreciated to 32.5 per USD after its two-week rally petered out at 32.2. The Bank of Thailand is another step closer to lowering its policy rate at its upcoming meeting on 29 September. At its last meeting on 4 August, two out of the six committee members voted to lower the target rate by 25 bps from 0.50%. The BOT also downgraded its 2021 GDP forecast to 0.7% from 1.8% previously. Yesterday, the Ministry of Commerce (MOC) was less confident about its 2021 inflation forecast of 0.7% to 1.7%. For the first time in five months, CPI inflation turned negative at -0.02% yoy in August from government subsidies in tuition fees, utility bills and selected food items. Having averaged 0.7% in the first eight months, MOC expects monthly inflation to stay negative for the rest of the year.


    SGD appreciation is limited to the floor of its pre-Covid range of 1.34-1.39 per USD.According to our model, the rise in the SGD NEER stalled around 0.7% above the mid-point of its policy band. Singapore might hold off returning the policy band to an appreciation path. The Ministry of Health warned that new daily Covid cases in Singapore could reach 2000 in October; cases doubled to more than 1200 cases last week. For now, the government is advising the public to reduce social interactions over the next fortnight and to step up regular testing. As a last resort, the government did not rule out returning to a heightened alert phase or imposing circuit breaker on a sharp increase in Covid cases ending up in intensive care units.

    Philip Wee

    FX Strategist - G3 & Asia
    [email protected]

    Subscribe here to receive our economics & macro strategy materials.
    To unsubscribe, please click here.
    The information herein is published by DBS Bank Ltd. It is based on information obtained from sources believed to be reliable, but the Group does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation & the particular needs of any specific addressee. The information herein is published for the information of addressees only & is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Group, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Group or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Group & its associates, their directors, officers and/or employees may have positions or other interests in, & may effect transactions in securities mentioned herein & may also perform or seek to perform broking, investment banking & other banking or finan­cial services for these companies. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Sources for all charts & tables are CEIC & Bloomberg unless otherwise specified.

    DBS Bank Ltd., 12 Marina Blvd, Marina Bay Financial Center Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E. DBS Bank Ltd., Hong Kong SAR Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.

    The information set out in this website ("Information") is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. This Information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation. This Information is published for general circulation only and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. Visitors accessing this website should always seek advice from an independent financial adviser regarding the suitability of the Information referred to herein (taking into account the specific investment objectives, financial situation and/or particular needs of each person in receipt of the Information) before making any investment and/or any purchase in reliance of the Information. Please refer to the actual research publications for important disclaimers and disclosures, where applicable.