The Monetary Authority of Singapore kept all three parameters of the SGD NEER policy band unchanged at its October review. The decision came alongside stronger-than-expected economic growth. Advance 3Q25 GDP expanded 1.3% QoQ sa (2.9% YoY) in 3Q25, beating the consensus forecasts of 0.6% QoQ sa (2.0% YoY). 2Q25 growth was also revised higher to 4.5% YoY from 4.4%. The Ministry of Trade and Industry will release updated GDP forecasts for 2025 and 2026 in November. The central bank assessed that the output gap will remain positive through 2025, narrowing to around 0% in 2026 as external demand softens. Both CPI All-Items and MAS Core Inflation are projected to stay within the 0.5-1.5% range in 2026, like this year’s forecasts.
USD/SGD climbed to 1.30 on Monday, fully retracing its 1.5-month decline to 1.27, driven by the Fed cut in mid-September. Unless the EUR falters, USD/SGD’s upside should be capped around 1.3020. Attention now turns to Fed Chair Jerome Powell’s remarks tomorrow – a dovish tilt towards a “risk management” stance, considering the US labour market risks from the ongoing US government shutdown could temper USD strength.
The DXY Index appreciated 0.3% to 99.3. S&P 500 Index rebounded by 1.6% to 6655 as the Trump administration downplayed fears of a US-China trade war, following last Friday’s 2.7% sell-off. JPY lost its haven appeal, with USD/JPY rebounding 0.7% to 152.28, after sliding 1.3% to 151.20 last Friday. Tokyo markets were closed for the Sports Day holiday on Monday. However, USD/JPY could decline again if the opposition unites behind a candidate to challenge Liberal Democratic Party leader Sanae Takaichi’s bid as prime minister at the Diet vote on October 20. Apart from doubts over Takaichi’s ability to deliver her Abenomics-style policies, markets are wary that further JPY weakness could prompt FX intervention or even a rate hike by the Bank of Japan in October or November.
EUR/USD slipped 0.4% to 1.1570, back towards last Thursday’s close of 1.1565. However, the 10Y OAT-Bund spread narrowed by 20 bps to 83.3 bps, retracing part of last Friday’s 158 bps widening to 83.5 bps. Re-appointed French Prime Minister Sebastien Lecornu has formed a new cabinet and is working to present the draft Budget 2026 to the National Assembly. Success hinges on securing support from the Socialist Party, which is leveraging its potential backing to seek concessions, particularly President Emmanuel Macron’s 2023 pension reform. EUR/USD faces a key trendline support at 1.1530, which must hold to prevent a further retracement to the 1.14 low seen at the end of July.
Quote of the Day
“You don't concentrate on risks. You concentrate on results. No risk is too great to prevent the necessary job from getting done.”
Chuck Yeager
October 14 in history
In 1947, Chuck Yeager made the first supersonic flight in the Bell XS-1 at Mach 1.06.
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