The Australian Dollar/Singapore Dollar currency pair (also referred to as AUDSGD and AUD/SGD) is an exotic currency pair. In this article, we will examine how AUDSGD is performing.
Key Stats:
- 2021 high: 1.0545
- 2021 low: 0.9588
- YTD high: 1.0382
- YTD low: 0.8836
- YTD % change: -8.45%
Another factor is the Singapore dollar’s emergence as a safe haven currency. While it is usually a haven against other Asian currencies, its strength against the likes of the Australian dollar, GBP, euro, and NZD this year suggests it is gaining more popularity as a haven currency compared to more mainstream peers.
Forecast Summary
The downside move in the AUDSGD since April has been pretty rapid, and a couple of technical factors suggest further downside is to come. When looking at the daily chart, we can see the pair recently retraced, forming a bear flag, before breaking lower. In addition, we see the most recent low at 0.8845 being broken and the price continuing its near-term downside move.
Fundamental Analysis
Fundamental analysis can be key in helping forex traders define potential long-term trends in a pair. For example, if we consider the United States’ aggressive rate hikes, we can ascertain that it has been part of the reason for its surge in recent months. That is, of course, alongside other factors such as its economic resilience during challenging conditions and the fact it is less exposed to a potential energy crisis. Therefore, it is essential to be aware of the current economic climate for the currencies we are trading.
The Australian Dollar is a frequently traded currency impacted by numerous global macroeconomic factors. Two significant drivers of the Australian dollar price are its wealth of natural resources and its trading relationship with Asian countries. For example, India and China have been large importers of Australia’s commodities and hold a strong relationship with the country.
In addition, many of Australia’s imports are heavy machinery and goods produced in those countries, so the AUD is not only affected by its own economy, but when other economies, such as China, suffer a downturn, it negatively impacts Australian exporters, hurting the supply chain and resulting in a weakening Australian dollar. Therefore, AUD traders must keep up to date with the Australian economy and its trade counterparts, as well as crucial data releases each week and month, such as interest rate decisions, inflation, and employment data.
The Singapore Dollar has been a favored choice for offshore investors as it has a growing financial centre and stable housing prices. Its high growth rate is down to it having one of the most business-friendly regulatory environments for entrepreneurs. In addition, it is a major trading hub, and its manufacturing and services sector remains one of its key growth drivers. Therefore, it is essential to assess Singapore’s current economic climate in order to develop a bearish or bullish bias on its currency.
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Technical Analysis
Despite a rise earlier in the early, the AUDSGD has declined significantly over the past few months, since around April. Price on the daily chart crossed the 100 MA a couple of times between April and June but has since acted as a trendline and an area to potentially sell if traders believe the pair will fall once again.
The bear flag pattern has also recently been broken, with the price falling once again, suggesting a further downside move is on the cards.
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