Constructive near term risk-reward profile for USD/SGD

If the tactically bearish stance on EM FX continues to unfold there is upside potential in USD-SGD. As shown in the diagram the Singapore dollar has lagged the weakness in regional currencies over the last one month.

On speculation grounds, add longs on near month futures of USD-SGD that has ideal risk-reward qualities:

• The recovery from the lows has only been 1%
  
  
• The 200DMA (1.3334) could act as support
  
  
• SGD NEER should be trading below, not above, the mid-point given sluggish growth and disinflationary pressures
  
  
• The positioning is probably neutral to slightly short dollars after the significant unwinding of positions in the aftermath of the Monetary Authority of Singapore (MAS) meeting.