USD/SGD trades near 2-week high as Middle East tensions dampen sentiment

The USD/SGD currency pair was mostly steady on Monday, while holding not far from recent two-week peak, as risks of a wider conflict in the Middle East weighed on the Singaporean Dollar and other Asian currencies.

Media reports emerged that Israel had launched air strikes on Gaza early on Monday and clashed with the Iran-backed Hezbollah group on its northern border with Lebanon, while more US military assets had been dispatched to the area.

Dampened market sentiment and high Treasury yields have provided support to the US Dollar, with the dollar index advancing 6.7% since mid-July.

The yield on benchmark US 10-year Treasury Notes was last at 4.978%. Last week, the 10-year yield briefly exceeded 5% after Federal Reserve Chair Jerome Powell noted that US economic strength and hot labor market could warrant tighter financial conditions.

Meanwhile, in terms of macro data, Singapore’s annual CPI inflation was reported at 4.1% in September, while accelerating from August’s 19-month low of 4%.

Costs rose at a faster rate for transport (6.3% YoY versus 4.8% in August) and healthcare (4.5% YoY versus 4.3% in August). Food prices went up 4.3% YoY, marking the slowest gain since April 2022, following a 4.8% increase in August.

Singapore’s annual core inflation decelerated to 3% in September from 3.4% in August, which marked the lowest rate in 18 months.

As of 7:56 GMT on Monday USD/SGD was inching up 0.04% to trade at 1.3725. Last week, the exotic Forex pair went up as high as 1.3748. The latter has been the pair’s strongest level since October 4th (1.3754).