Forex trading is one of the world’s largest and most liquid markets, with an average daily trading volume of over SGD 5 trillion. Singapore has emerged as a significant player in the forex market due to its strategic location and strong economic stability. The Singapore dollar (SGD) is one of Asia’s most actively traded currencies, making it an ideal place for forex traders.
Singapore’s geographical location is also a crucial hub for trading between different time zones. As Asian markets close, European markets open, and vice versa, creating a continuous 24-hour market from Monday to Friday.
It allows traders to engage in forex trading at any time of day, increasing the potential for profits. This article will discuss major, minor, and exotic forex pairs in Singapore and how they are traded in the market.
The USD/SGD pair
The USD/SGD pair is one of Singapore’s most traded currencies. It represents the exchange rate between the US dollar and the Singapore dollar. The relationship between these two currencies is closely tied to both countries’ economic and political developments.
The US dollar is considered a safe-haven currency, meaning it tends to appreciate during global economic uncertainty. On the other hand, the Singapore dollar is a currency highly influenced by international trade and commodity demand. Therefore, fluctuations in commodity prices and global trade tensions can significantly impact the USD/SGD pair.
The Monetary Authority of Singapore (MAS) is crucial in managing this currency pair. As part of its monetary policy, MAS manages the exchange rate against a basket of currencies, with the US dollar having the most significant weight. It allows for a more stable exchange rate and limits USD/SGD pair volatility.
Traders can use this currency pair’s high liquidity and volatility to make profits. Traders commonly use scalping or swing trading strategies to capitalise on short-term price movements. Traders can also use fundamental analysis to understand the economic developments in both countries and make informed forex trading decisions.
The EUR/SGD pair
The EUR/SGD pair represents the exchange rate between the euro, the currency of the European Union, and the Singapore dollar. European economic developments heavily influence this currency pair, especially in the eurozone’s major economies like Germany and France.
The European Central Bank (ECB) plays a significant role in managing the euro and can impact the EUR/SGD pair through its monetary policy. ECB announcements on interest rates, inflation, and economic forecasts can cause significant volatility in this currency pair.
Singapore is a significant trading partner with several European countries, making the EUR/SGD pair crucial for businesses and investors. Any changes in trade agreements or economic developments in Europe can cause fluctuations in this pair, providing traders with opportunities to profit.
Traders can use technical analysis tools such as trendlines, support and resistance levels, and moving averages to identify potential trading opportunities in the EUR/SGD pair. Keeping track of European news and events, such as elections or economic reports, can help traders make well-informed decisions.
The GBP/SGD pair
The GBP/SGD pair represents the exchange rate between the British pound and the Singapore dollar. As one of the world’s major currencies, global economic developments highly influence the British pound, making the GBP/SGD pair a volatile currency to trade.
Brexit, the UK’s withdrawal from the European Union, has significantly impacted the GBP/SGD pair. Any news or progress on Brexit negotiations can cause significant movements in this currency pair. Economic data such as GDP, inflation, and employment reports from both countries can also impact the GBP/SGD pair.
The Bank of England (BOE) is the central bank managing the British pound. Like other central banks, BOE decisions on interest rates and monetary policy can cause volatility in this currency pair.
Traders can use technical analysis to identify potential GBP/SGD pair trading opportunities. However, keeping track of economic and political developments in both countries is crucial to making informed trading decisions.
The JPY/SGD pair
The JPY/SGD pair represents the exchange rate between the Japanese yen and the Singapore dollar. Japan is one of Singapore’s largest trading partners, making this currency pair vital for businesses and investors.
Global economic developments heavily influence the Japanese economy, making the JPY/SGD pair volatile. Traders can use fundamental analysis to understand Japan’s economic indicators, such as GDP and inflation, to make informed trading decisions.
The Bank of Japan (BOJ) plays a crucial role in managing the Japanese yen and can impact the JPY/SGD pair through monetary policy decisions. Traders should keep track of BOJ announcements and economic data to identify potential trading opportunities.
Bottom line
Trading forex is popular in Singapore due to its intelligent and advanced trading infrastructure as well as the high financial literacy rate in the country. As a global commercial hub,
Singapore has trade deals with major countries and regions around the world, such as the United States, Japan, Great Britain, and the Eurozone. Knowing what moves the prices of these currency pairs can be a good way to start your forex trading ventures.
Image Credit: by envato
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