(Bloomberg) -- Singapore’s currency may tumble to the lowest level since 2017 if the central bank responds as strongly to the spread of the coronavirus as it did to the SARS epidemic two decades ago.That’s the view of Tan Teck Leng, a macro strategist at UBS Group AG’s Global Wealth Management Chief Investment Office, who thinks the Monetary Authority of Singapore could re-center its policy band for the currency lower. It took this rare action in 2003 to deal with the fallout from SARS and doing so again could see the local dollar dip through 1.40 versus the greenback, according to Tan.Singapore’s fiscal chiefs pledged S$6.4 billion ($4.6 billion) in dedicated support for the economy on Tuesday, underscoring the level of concern among policy makers about the threat posed by the virus. The city state has more than 80 confirmed cases of the coronavirus and its trade-dependent economy is particularly vulnerable.“There is a chance that if the virus were to get worse, that a re-centering down is possible,” Tan said in an interview in Singapore. “They can be very granular about how much they want to ease.”Singapore’s dollar has already slid 3.3% against the greenback this year, making it the worst-performing currency in Asia after Thailand’s baht.Read More: Singapore’s Heng Says Budget Gives ‘Large’ Boost to EconomyThe MAS most recently eased policy in October by slightly reducing the slope amid the U.S.-China trade war and slowing growth. The central bank has re-centered the band lower only three times since 2001, and it did so only after it had shifted to a neutral policy stance.The currency dropped to a four-month low earlier this month after the MAS said there was room within its exchange-rate band to accommodate currency weakness to counter the economic fallout of the disease.The central bank conducts it monetary policy through its currency and has three parameters to control the Singapore dollar: the pace of appreciation in the exchange rate, known as the slope; the width of the policy band; and the level at which that band is centered.Read More: A Central Bank With No Key Rate? Yes, in SingaporeOver the past two decades, most changes have been made by altering the slope.“The immediate consequence of a downward re-centering is that there’s suddenly additional room for the Sing NEER to weaken,” said Tan, referring to the nominal effective exchange rate. Assuming that the currency is trading close to the weaker end of the band, re-centering down could open the way for 1%-2% of additional depreciation, he said.The Singapore dollar was trading at 1.3907 per greenback on Wednesday.The central bank’s next policy review is in April.UBS sees the most likely scenario for April is that MAS flattens the slope as the impact of the virus is brought under control.Still, re-centering the band downward while keeping the slope positive is “in the realm of possibility,” said Tan.(Adds tout, updates prices)To contact the reporters on this story: Ruth Carson in Singapore at firstname.lastname@example.org;Masaki Kondo in Tokyo at email@example.comTo contact the editors responsible for this story: Tan Hwee Ann at firstname.lastname@example.org, Brett MillerFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a bearish start to the day for the majors. Expect Bitcoin to provide direction later in the day. A move through Tuesday’s highs would signal a breakout.
It’s a busy day ahead, with inflation figures out of Canada, the UK, and the U.S, and the FOMC Meeting Minutes in focus…
Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity.
Gold ran into resistance at a downtrending Gann angle at $1606.10. Trader reaction to this Gann angle will likely set the tone on Wednesday.
Gold markets rallied significantly during the trading session on Tuesday, breaking above the $1600 level. At this point, the market looks is likely to continue to go higher, especially if we can break to a fresh, new high.
Based on the early price action and the current price at 1.0811, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to Monday’s close at 1.0836.
The Euro continues to fall rather hard during the trading session on Tuesday as the German ZEW Economic Sentiment figures came out at less than half as expected.
The British pound rallied a bit during the trading session after falling when it was announced that the UK budget was going through. That being said though, this is a market that is still meandering around the 1.30 level more than anything else.
The British pound initially pulled back during the trading session on Tuesday but found plenty of support at the 50 day EMA to turn around and show signs of life again. The fact that the British are going to go ahead with their budget certainly help the situation as well.
The Australian dollar fell significantly during the trading session on Tuesday, as we continue to see a lot of concerns when it comes to the RBA cutting rates and of course the entire situation in China.
Litecoin remains in a bullish formation despite suffering a potentially devastating sell-off over the weekend. After surging to a six-month high of $83 Litecoin felt the full force of bearish pressure as it succumbed to a sudden 19.65% move to the downside. However, the world's sixth largest cryptocurrency rapidly bounced back before the daily candle close to avoid a confirmed break down in price. It has gone on to close two consecutive daily candles above the $72 level of support, which will be key if the rally is to see continuation over the coming weeks. If Litecoin can continue to establish $72 as a platform it will most likely swing back towards the $78 level of resistance. A breakout aboveThe post Latest Litecoin price and analysis (LTC to USD) appeared first on Coin Rivet.