**Broad Rally Lifts US Dollar, Singdollar Dips**

Tecfai Editorial Team

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Post on Nov 06, 2024

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Broad Rally Lifts US Dollar, Singdollar Dips

The US dollar strengthened across the board on Wednesday, buoyed by a broad-based rally in global markets, while the Singapore dollar dipped against the greenback.

Stronger US Dollar

The US Dollar Index, which measures the greenback against a basket of six major currencies, rose by 0.5% to 104.25, hitting its highest level in almost a month. The rally was fueled by several factors, including:

• Positive economic data: Strong US economic data, including a better-than-expected reading on the manufacturing sector, boosted investor confidence and fueled demand for the dollar.
• Global risk-on sentiment: A positive mood in global markets, driven by easing recession fears and a potential slowdown in interest rate hikes, favored the dollar, considered a safe-haven asset.
• Higher US Treasury yields: Rising yields on US Treasury bonds, driven by expectations of continued strong economic growth, also supported the dollar.

Singdollar Weakness

The Singapore dollar weakened against the US dollar, trading at 1.3680, its lowest level in over a week. The decline was attributed to:

• Diverging monetary policies: The US Federal Reserve is expected to continue raising interest rates, while the Monetary Authority of Singapore (MAS) has adopted a more cautious stance, keeping its policy settings unchanged in its last meeting. This divergence in monetary policies is making the US dollar more attractive compared to the Singdollar.
• Stronger US economic outlook: The positive economic outlook for the US economy is attracting more foreign investment, boosting demand for the US dollar.
• Oil price concerns: Concerns over rising oil prices, fueled by geopolitical tensions, could potentially impact the Singapore economy, which is heavily dependent on trade and energy imports.

Outlook

The US dollar is expected to remain strong in the near term, supported by the robust US economy and expectations of continued interest rate hikes. The Singdollar is likely to face further pressure in the coming months, especially if oil prices continue to rise and global economic growth slows down.

Investors and traders should closely monitor the economic developments in the US and Singapore, as well as the global risk appetite, to assess the potential direction of the US dollar and Singdollar in the coming weeks.