USD-SGD now trading at 1.22 range

When I decided to advise on taking profit in early April, the USD still bought SGD 1.255.  Decisions like these are taken as much for pragmatic reasons (sideways markets typically unrofitable for equity investors) as for strategic reasons (such a phase is often used by big & savvy investors to switch to another favourite asset class and bank the profits in overbought holdings).  

I also noticed that the decision by the MAS to re-value the SGD seem to coincide with such periods, too.  True enough, an announcement mid-April resulted in a prompt adjustment of the SGD into the high 1.23 range.  Now, we are at 1.2255 (today's level as of 11.30h a.m.)  We could argue that through the rosy specs of a USD investor our cash positions rose 2.6% or thereabouts in less than a month... by taking 0 risk (according to the iFAST risk measure for SGD Cash fund)!

Whereto for the Greenback?

USD - YEAR-To-DATE

Is this the end phase for the USD? Or is it sliding no end?

The chart only covers the period since beginning of the year. but we know that the current downward trend has started as early as March 2009 from a level above 0.89, coinciding with the lowest point of the stock market crash. In June 2010 a double peak can be recorded, almost - by reaching a high of 0.88 again.  It was downhill since then. 

The reference levels here refer to

'Greenback' versus world currencies.  

In the chart you can see that prices are sliding down the Fibonacci fan line, hugging it tightly. We have just breached the lows of November 26, 2009, a rather ominous sign for things to come. The next significant level is the low of July 15, 2008, which stands at 71.31.  There has been strong support by investors at this level in the past.  It is fair to say that things aren't what they used to be, so - a break through this level is possible, probably after some initial struggle.  The Fibonacci fan and the support level are crossing at the end of May - and so, give or take two weeks, we might see a battle ensuing to save the USD, - at least a rebound to 0.74.  

As and when this support breaks down, a more portentous decline in the USD is predestined, - one without any existing parameters to guide us, i.e. we are entering uncharted territory! Scary? I guess so.  Against that we note that it is ONLY the USD, which is experiencing such a decline.  Most major currencies, and all Asian currencies are UP in tandem, leaving very little room for any arbitrage between them. We could say that the only ones looking through the wrong 'specs' are USD investors, - and while they are still cheering a booming US economy and its rising stock markets it means NOTHING to SGD investors: none of the equity funds investing outside of Singapore (let alone in US assets) have really provided positive returns in the last two weeks - since I called to take profit. Even gold as an asset class is in doubt if the USD continues its decline at the current speed.

I Told You So!

Do you recall what I have been saying in my seminars and elsewhere since late last year?  Don't invest your increasingly precious Singapore dollars outside of Singapore, unless you checked your chances of gain not once, not twice BUT thrice before engaging. This is not a statement to be ignored this year, - or the next!