OCBC’s Sim Moh Siong and Christopher Wong note that USD/SGD is recovering from earlier losses following US tariff headlines, with lower risk appetite and reduced expectations of MAS tightening in April negatively impacting the Singapore dollar. Core CPI forecasts were in line with forecasts, but the surprising decline in core inflation reassured the House of Representatives that MAS would maintain its policy in April and monitor subsequent inflation data.

The surprise in core inflation supports the rebound

“Previous USDSGD losses following U.S. tariff announcement show signs of slowing down.”

“Lower risk appetite and a slight weakening in expectations for a tightening of the MAS in April (following a decline in core CPI) are some of the factors that contributed to the SGD’s underperformance overnight.”

“Our economist emphasized that the total CPI is in line with our forecast of 1.4% y/y, but the decline in core inflation to 1.0% y/y was a surprise, which was explained by the weakening of inflation in services.”

“Our view continues to anticipate the MAS to take place in April and monitor further inflation prints.”

(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)