The Monetary Authority of Singapore left its policy band unchanged on 14 October. In a Reuters poll, all ten economists had expected a third tightening this year. USD/SGD and CAD/SGD both rose on the day. Our CAD/SGD, EUR/SGD and SGD/CHF positions all lean on SGD strength, and they lost a catalyst our analysis had counted on. Thursday's data did the most damage: Australia lost 39,300 jobs in September and markets priced out most of a November RBA hike, while UK GDP grew 0.1% in August when a contraction was expected, and GBP/AUD rose more than 260 pips in one session, through the stop on our short. On the same day a global sell-off in chip stocks, driven by worries about how AI spending gets financed, pushed the 10-year Treasury yield down 14bp to 5.05%, which erased much of the dollar's gain from Wednesday's hotter core CPI, lifted EUR/USD and GBP/USD against our shorts and pulled USD/CAD to its lowest close since entry. Then on Saturday, Bank of Canada Governor Macklem said the Bank expects to raise its inflation forecast significantly because oil and fuel prices remain high, and he presented 28 October as a decision on whether to hike, which is the biggest threat yet to our bet against the Canadian dollar in USD/CAD, AUD/CAD and CAD/SGD.
How our views are tracking
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Short CAD/SGD — thesis weakened The MAS hold removed our SGD catalyst and Macklem's hawkish turn brings back the BoC hike premium we were betting against, so the pair is at its highest close since entry and the position now rests on strategic conviction rather than any near-term trigger. |
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Short EUR/SGD — thesis unchanged Stress over French government finances still keeps the euro the weakest major and the trade in profit, but the MAS hold has given back part of the gain and turned this into a trade that depends only on the euro. |
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Long USD/CAD — invalidator approaching Canadian data is doing what we expected, but Thursday's Treasury rally and Macklem's hawkish shift have left the pair less than one recent daily move from its stop, so we would carry reduced size into Monday's CPI. |
Invalidator watch
One invalidator has triggered: GBP/AUD closed above its stop on 15 October, and we will reassess it in the next full analysis rather than adjust it here. The BoC-hike invalidator that CAD/SGD, USD/CAD and AUD/CAD share is now firmly on watch, and that overlap is the biggest risk in the book. Our EUR/USD and GBP/USD shorts are still fully valid because the US CPI invalidator cleared when core prices rose 0.3% in September.
Next week
| Mon Oct 19 | Canada September CPI | Affects: USD/CAD, CAD/SGD, AUD/CAD |
| Tue Oct 20 | French National Assembly vote on the revenue package | Affects: EUR/USD, EUR/SGD, SGD/CHF |
| Wed Oct 21 | UK September CPI | Affects: GBP/USD, GBP/AUD |
| Wed Oct 21 | New Zealand Q3 CPI | Affects: NZD/USD |
| Fri Oct 23 | Moody's review of France; Singapore CPI | Affects: EUR/USD, EUR/SGD, CAD/SGD |
Monday's Canadian CPI is the one that matters most: consensus expects headline inflation to rise to 3.2% from 3.0%, and after Macklem's comments a firm core reading could make 28 October a live hike and hit three of our positions before the BoC even meets.
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