Frances Cheung, analyst at Westpac, expects the Monetary Authority of Singapore (MAS) to reduce the slope of its SGD NEER by 50bps, from a currently-assumed 1%, while keeping the centre and band width unchanged.

Key Quotes

“We also expect a dovish statement. Given the relatively high position of the SGD NEER with respect to the band (1.1% above midpoint), a reduction in the slope despite being priced in will still likely point to downside for SGD NEER. This is likely to translate into USD/SGD movement as room for SGD underperformance against regional peers may be limited, with the next resistance at 1.39.”

“If the day turns out to be a riskoff one, safe-haven flows will likely counteract the SGD reaction to MAS easing. The rates and forward curves, meanwhile, appear fairly priced.”