With growing anticipation of interest rate cuts by the Federal Reserve, the Singapore dollar rose against the US dollar during Asian trading hours. This movement reflects a decline in investor interest in dollar-denominated assets, prompting a shift toward other currencies.
Data released on Thursday revealed that U.S. job openings in December dropped to their lowest level since 2020, while initial jobless claims unexpectedly rose. These weak indicators have reignited speculation about potential rate cuts by the Fed.
Market Reaction
Analysts noted that the persistent softness in the U.S. labor market has significantly increased expectations of a rate cut in March. According to swap market data, the probability of a rate cut has surged from 10% on Monday to 30%.
- The USD/SGD exchange rate fell 0.1% to 1.2738.
- Investor sentiment has shifted toward non-U.S. currencies, with the Singapore dollar emerging as one of the main beneficiaries.
In summary, the appeal of the U.S. dollar is waning, while currencies like the Singapore dollar are gaining strength amid rate cut speculation. Future movements will largely depend on the Fed’s policy decisions.