Monetary intervention on SGD and a case for the currency

 The Singapore monetary authority intervened on the SGD exchange rate right after my post on the currency last week. My understanding is that it will tighten its monetary control not through interest rate rise but through a tighter exchange rate by "re-centring the mid-point of its exchange rate-based policy band up to prevailing levels but kept the slope and width of the band unchanged" ( quote from Singapore tightens policy, keeps door open for more moves on hot inflation | Reuters ).

To be honest, I am not sure what that means except that it is interfering on its exchange rate. The effect was a plunge upon the news release on Friday. However, the currency seemed to lose some of its gain by the end of the day.

Before moving on, I need to bring up an issue with https://finance.yahoo.com.

Fig 1. SGD weekly chart shown in past week

Fig 2. Present week's SGD weekly chart 

At the time I was doing my last entry on SGD, I did not take note that the chart was in fact not up-dated. This led me to conclude a high chance further SGD weakening. Reassessing the chart this week however, the closing of last week did not surpass the open of the previous week. My conclusion would have been more conservative.

So whose fault is it? It would be me, I did not do my due diligence to verify the data.

Anyway, let's move on.

Looking at the bar development, it seems that the news influence from the Monetary Authority of Singapore (MAS) did not cause significant changes. While there was fluctuation, it nevertheless stayed within the band, suggesting to me that SGD would not appreciate significantly in the coming week. 

My feel is that it will retrace back towards its 8-week moving average (1.4185) before heading upward. Worst case scenario would be its 55-week moving average support presently at 1.3812.

To be frank, Singapore is a rare country in the world with capacity to maintain the stability of its currency, considering its caution spending behavior leading to sizeable reserve. It is viable to gauge how other currencies perform against this counter.

Fig 3. SGDJPY Weekly Chart

I went on a business trip in Japan in 1999. The exchange rate at the time was around ¥60 per SGD. Technically, JPY was double of SGD. My wife went for a tour in Japan with her friend 2 to 3 years ago. While JPY depreciated against SGD at the time, it was still around ¥80+ per SGD. 

The chart today, however, SGD is technically at par with JPY. With JPY104 per SGD. Considering the set up on this chart, there are still some up-side for SGD, the next level of resistance will be at ¥107.

Fig 4. SGDAUD Weekly Chart

The first time I encountered AUD was in 1982, Asian Currency Unit (ACU) was a hot investment at the time when the interest rate of AUD deposit for instance was around 15% per Anum. The exchange rate at the time as around AUD1.00 to SGD1.45.

 Even when I went on business trip in mid 2000s, the exchange rate at the time fluctuated between SGD1.10 to SGD1.20.

The chart today shows a closing of this week, SGD1 will get AUD1.1094. It has presently past the 50% retracement and indicators maintain continue strengthening of SGD against AUD.  The next level of resistance is close at AUD1.1337 to 1.1841.

Fig 5. SGDNZD Weekly Chart

New Zealand is like a little brother of Australia. In fact, they have very close relationship and Immigration and Custom are more relax for citizens of both countries.

Like AUD, it used to be much stronger than SGD, while not as strong, it was at least SGD1.20 per NZD during the 1980s. It is now NZD1.255 per SGD.

The SGDNZD chart does show a strong appreciation of SGD against NZD. It has already surpassed the 61.8% projection of 1.2012. The next resistance level is NZD1.315.

There is a contradiction with NZD. It has just reached the previous high of NZD1.2570 and retesting its resistance level. As a result, a shooting star was formed. While in contradiction with the strong moving averages support on for an up-trend. I suspect there might be a correction coming for SGDNZD. Its performance in the coming week would be important.

However, should it surpass this resistance level, NZD1.320 will be a high possibility.

Fig 6. SGDEUR Weekly Chart

SGDEUR is interesting, the pair appreciates after a long congestion, making it a little tricky in conducting measurements. The ascension is with momentum and presently congesting at its 61.8% projection level.

Using the projection measurement, the next level of resistance will be 0.7361, very close to its present closing of 0.7208. If I consider the "double bottom" formation, on the other hand, I see resistance at 0.73702.

It is possible that SGDEUR may be reaching its limit for this round considering the close proximity of both resistances. But with strong support from moving averages, we might be seeing a correction instead of reversal.

Fig 7. SGDGBP Weekly Chart

Surprisingly, SGDGBP is the best performing chart this week even after the fiasco from prime minister Truss introducing tax cut by increasing nation's debt.

A reversal pattern was formed by 25th September 2022 and congested with small bars followed on the subsequent 2 weeks. 

Does it really indicate a reversal? Possible but I am not firm on this due to strong moving averages support. What I will do is to set an order on the low of the small bars in case there is a break-out from the congestion.

But bear in mind that it is highly possible that the pair is entering a congestion corrective phase, with possibility of huge fluctuation. Every moving average it goes in contact with will likely cause a rebound. 

Alternatively, it may continue to climb higher, but with the "reversal bar, it will at least be slowed down, climbing with a gentler gradient.

I have been thinking go of what to do as the ascension of USD is concerning. Is there a currency that I can park my fund on? But going through this exercise, it seems that SGD is stable enough as a safe haven to me.