There will be more than a few people scratching their heads this morning wondering what is so important about Singapore. As it was when Australia started hiking rates last year the market took this as a sign that global economies were on the mend. Singapore now follows Malaysia in tightening in Asia but in such an aggressive mode that the market was caught entirely wrong footed.
The MAS statement was decidely hawkish suggesting that concern about the strength and the sustainability of the global recovery underway has been greatly reduced. One of the IBs pointed out that this was the first timeat least since the MAS began publishing decisions in 2001, that the central bank has simultaneously shifted the midpoint and the slope of the band at the same time.
USD/SGD fell over 1% on this SGD revaluation move with “risk on” currencies jumping simultaneously. Stock markets posted moderate gains, commodities moved higher and the US Dollar was sold across the board.
EUR/USD for its part ran into a wall of sellers above 1.3660 and has backed off a little but generally gains have been held. Lets hope for a change today that Greece is “not” the word.
