USD/SGD settles below 8-week high, posts weekly gain

The USD/SGD currency pair settled below recent high of 1.2951, its strongest level since August 1st, after US PCE inflation data met expectations and reinforced bets that the Federal Reserve could ease policy further this year.

Annual core PCE inflation has remained steady at 2.9% in August, while annual PCE inflation has accelerated to 2.7% from 2.6% in July.

Markets are now pricing in about an 85% chance of a 25 basis point Fed rate cut in October and a 33% chance of another 25 bps cut in December.

The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.

Federal Reserve Chair Jerome Powell said this week the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.

In the meantime, Singapore’s manufacturing production shrank 7.8% year-on-year in August, data showed, following a revised up 7.7% growth in the preceding month. It has been the first drop since June 2024.

On the global trade front, US President Donald Trump announced a new round of tariffs on imported drugs, trucks and furniture, which will take effect on October 1st.

The exotic Forex pair gained 0.52% for the week.