Singapore is a small country in
Asia with a population of more than 5 million people and a GDP of more than
$330 billion. It is one of the most developed country in the region. Its democratic
model and strong judiciary, coupled with its close proximity to China makes it
an attractive country to investors. As a result, while it has fewer resources,
it has emerged as one of the fastest growing economies in the world.
Today, the country released its
first reading of the second quarter GDP number. Data from the Ministry of Trade
and Industry showed that the first preliminary reading of the economy, the
country expanded by just 0.1% year on year. This was significantly lower than
the 1.1% growth that investors were expecting. This was the slowest economic
growth for the country since 2009. It was also lower than the final reading of
the first quarter growth of 1.1%.
On a MoM basis, things looked
worse. In the quarter, the economy shrank by -3.4%, which was much lower than
the expected growth of 0.1%. In the previous quarter, the economy had expanded
by 3.8%. This was attributed to the weak manufacturing sector, especially the
manufacture of electronics and precision engineering, which declined by 3.8%.
This is ironic because Singapore has been seen as a major beneficiary as most
manufacturers move from China to other countries in the region.
Other recent economic data has
not been bad. The unemployment rate remains at 2.1%, making it one of the best
in the world. The inflation data of 1.3% remains at below the Singapore central
bank target of 2%.
Meanwhile, data from the
statistics office showed that retail sales for the month of May continued to
weaken. On a MoM basis, the retail sales declined by -2.1%, which was lower
than the previous gain of 0.2%. On a MoM basis, the retail sales declined by
-2.2%, which was lower than the expected -0.6%.
The USD/SGD pair has been moving
upwards this week. The pair has moved from a low of 1.3543 to today’s high of
1.3590. On the chart below, this price is below the double top level of 1.3626.
The pair is trading along the 38.2% Fibonacci Retracement level. The RSI has
moved from the oversold level to almost 60 while the pair is trading above the
21-day and 42-day moving averages. The pair could continue moving higher to the
50% Fibonacci Retracement level of 1.3600.