Friday’s trade saw USD/SGD within the range of 1.3085-1.3142. The pair closed at 1.3140, adding 0.08% on a daily basis, while losing 0.65% for the whole week, which followed seven consecutive weekly gains.
Fundamentals
United States
New York Empire States Manufacturing data
The New York Empire State Manufacturing Index probably improved to a reading of 12.00 in December, according to the median forecast by experts, from 10.16 in the prior month. If so, this would be the highest index reading since September, when the indicator was reported at 27.54.
The index is based on the monthly Empire State Manufacturing Survey, which is conducted by the Federal Reserve Bank of New York. About 200 top manufacturing executives respond to a questionnaire, sent out during the first day of the month. They provide their estimates in regard to the performance of several business indicators from the prior month, while also forecasting performance during the upcoming six months.
The ”general business conditions” component of the index is based on a distinct question, posed on the Empire State Manufacturing Survey, which means it is not a weighted average of the other indicators. These indicators, which are only applicable to the manufacturing facilities of survey respondents in the region of New York, include new orders, shipments, unfilled orders, delivery time, inventories, prices paid, prices received, number of employees including contract workers, average employee work week, technology spending and capital expenditures.
The general business conditions component and the sub-indexes for the 11 indicators are calculated by subtracting the percentage of respondents, rating an indicator as ”lower” (a drop), from the percentage of respondents, rating the same indicator as ”higher” (an increase). In case 33% of survey respondents stated that business conditions had improved during the current month, 50% stated that conditions had not changed, and 17% of the respondents stated that conditions had deteriorated, the index would have a reading of 16. Readings above 0.00 are indicative of improving business conditions in the region. Higher-than-anticipated index value would certainly boost demand for the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 13:30 GMT on Monday.
Industrial output, Capacity Utilization Rate
Industrial output in the United States probably expanded 0.6% in November compared to October, following a 0.1% contraction in October compared to September. Manufacturing production expanded 0.2% in October, as the production of non-durable goods increased 0.3%, while the production of durable goods edged up 0.1%. Mining output declined 0.9%, while utilities output shrank 0.7% during the same month.
The index of industrial production reflects the change in overall inflation-adjusted value of output in the three major sectors mentioned above. The index is sensitive to consumer demand and interest rates. As such, industrial production is an important tool for future GDP and economic performance forecasts. Those figures are also used to measure inflation by central banks as very high levels of industrial production may lead to uncontrolled levels of consumption and rapid inflation. It is a coincident indicator, which means that changes in its levels generally echo similar shifts in overall economic activity. A larger-than-projected increase in the index would usually boost demand for the US dollar.
The Board of Governors of the Federal Reserve is to release the production data at 14:15 GMT.
In addition, Capacity Utilization Rate in the country probably rose to 79.3% in November from 78.9 in October. If so, this would be the highest utilization rate since March. This indicator represents the optimal rate for a stable production process, or the highest possible level of production in an enterprise, in case it operates within a realistic work schedule and has sufficient raw materials and inventories at its disposal. High rates of capacity utilization usually lead to inflationary pressure. In general, higher-than-anticipated rates tend to be dollar positive.
NAHB Housing Market Index
The National Association of Home Builders (NAHB) Housing Market Index probably slipped to a reading of 57.0 in December, according to expectations, from 58.0 in November. The latter has been the highest index reading since September, when the indicator stood at 59.0. It is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide support to the greenback. The official data is scheduled for release at 15:00 GMT.
Singapore
Unemployment rate
The final seasonally adjusted estimate of unemployment in Singapore probably confirmed the preliminary estimate of 1.9% in the third quarter, which was reported on October 31st. In Q2 the final jobless rate stood at 2.0%. According to the report by Singapores Ministry of Manpower, lay-offs rose during the third quarter of the year, reflecting business restructuring. While some increase in layoffs is expected as businesses restructure, unemployment has remained at low levels, as the economy continues to add job positions. Total employment growth in Q3 (27 100) was little changed from the preceding quarter (27 700), but it lowered compared to a year ago, when a job gain of 33 100 was reported. Total employment in the country reached 3 577 000 in September, or a 3.6% increase in comparison with September 2013. At the same time, redundancy increased during the third quarter, as 3 400 employees were affected. This number exceeded the 2 410 workers made redundant in the prior quarter and the 2 710 employees laid off in Q3 2013.
The rate of unemployment represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. It also reflects overall economic state in the country, as there is a strong correlation between consumer spending levels and labor market conditions. Low rates of unemployment are accompanied by stronger spending, which causes a favorable effect on corporate profits and also leads to overall growth acceleration. Therefore, in case the rate of unemployment in Singapore met expectations or even fell further, this would support demand for the local currency. The Ministry of Manpower is to announce the final jobless rate at 2:00 GMT on Monday (December 15th).
Retail Sales
At 5:00 GMT Statistics Singapore is expected to report on retail sales in the country regarding October. Seasonally adjusted sales dropped 0.4% in September compared to the preceding month, following a 5.3% gain in August. The latter has been the fastest monthly increase since April 2013, when sales climbed at a rate of 5.5%. Sales, excluding motor vehicles, decreased 0.9% in September. In annual terms, the retail sales index rose 5.5% in September, marking the fourth consecutive month of gains. Annualized retail sales, excluding motor vehicles, were up 0.6% in September. Total value of sales was $3.1 billion in September, or an increase from $3.0 billion in the same month a year earlier.
The monthly performance of the general retail sales index in September was mainly influenced by a 4.2% drop in sales of food and beverages, a 2.8% decline in sales of recreational goods and a 2.1% fall in sales of footwear and wearing apparel. Upward pressure came from sales at Mini-Marts and Convenience Stores, which rose 2.0% in the same month, and a 1.8% increase in sales of motor vehicles.
The report on retail sales provides key information regarding the consumer spending trend, while the latter is a key driving force behind economic growth. In case retail sales index dropped in October, this would have a bearish effect on the local dollar.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.3122. In case USD/SGD manages to breach the first resistance level at 1.3160, it will probably continue up to test 1.3179. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3217.
If USD/SGD manages to breach the first key support at 1.3103, it will probably continue to slide and test 1.3065. With this second key support broken, the movement to the downside will probably continue to 1.3046.
The mid-Pivot levels for Monday are as follows: M1 – 1.3056, M2 – 1.3084, M3 – 1.3113, M4 – 1.3141, M5 – 1.3170, M6 – 1.3198.
In weekly terms, the central pivot point is at 1.3154. The three key resistance levels are as follows: R1 – 1.3231, R2 – 1.3322, R3 – 1.3399. The three key support levels are: S1 – 1.3063, S2 – 1.2986, S3 – 1.2895.
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