Singapore dollar trades at $1.2236

The local currency remains in a tight channel against the strengthening US dollar.

IG Markets Singapore said:

The Singapore Dollar ends the week virtually unchanged against the US dollar reflecting the caution in the currency pair.

A full week after the Fed announced QE3, traders are slowly getting back to the fundamentals of the global economy.

These numbers are causing caution among traders as weak manufacturing data reverberated around the globe.

The greenback has been strengthening as of late as investors still seek safe havens and pile back into US treasuries, despite their all-time low yields.

The local currency trades at $1.2236 this morning, remaining in a tight channel against the USD, a trend it may find hard to break in the short term.

DBS Group research meanwhile noted:

The post-QE environment is proving to be challenging for markets. In the US, equities and the real economy have diverged during the run-up into QE-infinity.

Yes, the European Central Bank (ECB) has mitigated the tail risks to the Eurozone sovereign debt crisis. Unfortunately, according to the latest BofA Merrill Lynch fund managers survey, tail risk worries have now increased over the US fiscal cliff.

Last month, the US Congressional Budget Office warned that left unaddressed, the fiscal cliff could lead to a US recession with two million job losses next year.

Past QEs were also associated with a weak US dollar story. In 2010, QE2 was launched in November, after China resumed its yuan appreciation in June.

Today, Ministry of Commerce in China warned that exports for the rest of the year will underperform the first eight months. China is also emerging as an issue into the November US presidential election.

America and China have filed anti-dumping charges against each other with the Word Trade Organization. It also does not help that China and Japan relations have deteriorated over the islands dispute.

And finally, Brazil has once again complained about the latest QE potentially stoking another currency war. In short, a QE-led weak USD story may not be that straightforward this time around.

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