Singapore: Inflation accelerated in March – UOB

UOB Group’s Economist Barnabas Gan reviews the latest inflation figures in Singapore.

Key Takeaways

“Singapore’s consumer prices rose at its fastest rate in a decade at 5.4% y/y (+1.2% m/m nsa) in Mar 2022. This is significantly faster compared to market expectations for a 4.7% y/y (+0.8% m/m nsa) print. Core inflation also accelerated to 2.9% y/y in the same month (Feb: +2.2% y/y).”

“Headline inflation has climbed for seven straight months, while core inflation stayed above the 2.0% handle for the fourth straight reading. In line with the recent MAS policy statement, authorities have upgraded their headline and core inflation forecast to 4.5 – 5.5% (from 2.5 – 3.5%) and 2.5% - 3.5% (from 2.0 – 3.0%) in 2022, respectively.”

“As discussed in our latest MAS policy and GDP report, we keep our headline inflation forecast to average 4.5%. Moreover, we expect core inflation to breach 3.0% for the rest of this year, and average 3.5% for the year.”

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EUR/USD unlikely to gain traction while below 1.0830

EUR/USD has staged a modest rebound to the 1.08 area. Unless the pair manages to clear the 1.0830 resistance, sellers are likely to continue to dominate the pair's action.

1.0760 aligns as key near-term support for the euro

“Investors will keep a close on US T-bond yields. In case the 10-year yield rises above 3%, EUR/USD could come under renewed bearish pressure.”

“In order to extend its rebound, EUR/USD needs to clear the static level that seems to have formed at 1.0830. Above that level, the 1.0850/1.0860 area (50-period SMA, static level) aligns as the next hurdle ahead of 1.09 (static level, psychological level).”

“On the downside, key support is located at 1.0760 (static level, post-ECB low). If that level turns into resistance, 1.0730 (April 24, 2020, low) and 1.07 (psychological level) could be seen as the next bearish targets.”

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