Monetary Authority of Singapore was less dovish than expected, which means USD/SGD is lower. Those positioning for a wider Singapore dollar NEER band were disappointed. MAS kept the width of the band at -2/+2%, re-centered the band, and reduced the slope to zero.
Over the short term, and running counter to the run of economist's logic, I don't believe Asian central banks want to weaken their currencies aggressively. With the world in lockdown, why do they need a weaker currency when there's no one to export to?
Instead, a stronger to stable currency attracts more capital inflows at a time when you want to start to internalize economies until the world sees COVID-19 pass.
Not to mention MAS doesn't want to raise the ire of the US treasury when the Fed has offered them a USD FX SWAP lifeline.
Focus on the US economy
There is an intense focus on when the US economy will reopen, but it looks like there is more suffering to come. But below S&P 500 2500, it seems like investors are willing to bring their shopping list back out while playing the odds for a quick economic turnaround.
If you believe that narrative will unfold, then it makes total sense to place your toe into the "dip" pond as the combined stimulus efforts from around the globe will provide a gale force tailwind for risk assets when the COVID-19 passes.
But it seems to me that its only market markers or long term buy only (perma bids) that are driving this equity rally these days.
Market makers seem to be reloading inventory in the most popular stocks to sell higher, while institutional long-only players are averaging in on their massive warehouse of tech stock.