USD\/SGD has been retracing earlier losses that followed US tariff headlines. The move comes alongside softer risk appetite and reduced expectations that the Monetary Authority of Singapore (MAS) will tighten policy in April.<\/p>\n
Singapore\u2019s headline CPI was 1.4% year on year, matching forecasts. Core inflation fell to 1.0% year on year, which was attributed to easing services inflation.<\/p>\n
The softer core inflation reading has contributed to the reduction in expectations for MAS tightening in April. The current view is that MAS will hold policy in April and track upcoming inflation data.<\/p>\n
The article was produced using an AI tool and reviewed by an editor.<\/p>\n
We are seeing the unwinding of a trend that began last year, where expectations for the Monetary Authority of Singapore to tighten policy had faded. The surprise dip in core inflation we saw back in 2025 reinforced the view that the MAS would hold policy steady. However, the latest January 2026 data showed core inflation accelerating to 3.1%, significantly above forecasts and putting MAS tightening firmly back on the table.<\/p>\n
This renewed inflation pressure has completely altered market sentiment ahead of the April 2026 policy meeting. Whereas last year the market was pricing out any chance of a move, overnight index swaps now imply a greater than 70% probability that the MAS will re-center its policy band higher. This is a dramatic shift from the dovish stance that dominated thinking for much of 2025.<\/p>\n
On the other side of the pair, the US economy remains strong, with the most recent labor report showing a gain of over 250,000 jobs, keeping the Federal Reserve on a hawkish path. This contrasts with periods in 2025 when fears of a US slowdown occasionally weakened the dollar. Now, we face a scenario where both central banks are signaling tighter policy, creating a complex but opportunity-rich environment.<\/p>\n
For derivative traders, this signals that implied volatility in USD\/SGD options could be a valuable trade, especially for contracts expiring around the April MAS meeting. Given the renewed potential for a stronger Singapore Dollar, strategies like buying USD\/SGD put options or constructing put spreads could be effective ways to position for a hawkish surprise from the MAS. The cost of these options may still reflect some of the older, more dovish sentiment.<\/p>\n
However, we must remain mindful of global risk appetite, as any significant flight to safety could still trigger a broad-based rally in the US dollar, overriding local factors. This risk suggests that traders should favor strategies with defined risk, such as spreads, rather than taking on unlimited risk with naked short positions. Watching global equity market volatility will be key to managing this aspect of the trade.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/SGD rebounds as tariff-driven losses fade; softer risk sentiment and cooling core inflation curb MAS tightening hopes.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42757","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42757","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=42757"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42757\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}