Wednesday, October 7, 2015

Long USD/SGD into MAS policy easing - NAB

FXStreet (Bali) - Christy Tan, Head of Research, Asia Pacific, National Australia Bank, believeS the MAS will ease monetary policy next week and recommend entering long USD/SGD.

Key Quotes

"The recent consolidation in USD/SGD from the peak of 1.4366 to 1.4223 is expected to be tentative and the upside bias may re-emerge in coming sessions and may extend in reaction to an MAS policy easing. A mere reduction in S$NEER slope to zero without a band widening or a re-centring may trigger the least upside gains in USD/SGD, as the MAS will be intervening to defend the band."

"Any other combination paves the way for at least another 1.0% and potentially up to 3% upside prospect in USD/SGD (from NEER perspective). Accordingly, we recommend entering long USD/SGD 1M forward outright at 1.4261 (spot reference 1.4241), targeting 1.45 (spot reference) with a stop at 1.4150. The risk to the trade is a no change announcement by the MAS and/or a strong CNY appreciation."
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