FX Thoughts : Time To Head To The Polls
We have 2 elections coming up – Singapore on 11 Sep and Canada on 19 Oct, just when markets do not look as rosy as they did 3 months ago with global growth now looking suspect and a general mood of fear griping the populace.
Charting the CADSGD, we see that the pair hit a 17 year low early August before rebounding higher after the SG elections were announced.
It is probably to do with oil prices which I have added into the chart for comparison and illustration, but we are also seeing the SGD Neer weaken a tad in the past week, testing the lower side of the band (-2%) and some heavy selling of the SGD dollar since according to flow traders.
We need to look no further than the bond markets for indication and Singapore sticks out with yields rising the most among peers in Asia and the developed world since 25 Aug.
It would look worse if we did not have a rally in the past 2 days which was matched by the SGD weakening to a 5 year low, which capped the rise in bond prices.
Bonds are purportedly led by the SGD fwds which have risen to 6 year highs, suggesting that markets are suddenly pricing in either a MAS weakening in October or hedging election bets, or both.