SGD: USD/SGD Consolidates After 1.2800 Break Lower, Exports Miss

The People’s Bank of China will maintain a moderately accommodative monetary stance in Q2, with the priority on stabilising employment, businesses, markets, and expectations, the central bank's latest quarterly report said. Monetary policy will be calibrated in line with domestic and external economic and financial conditions as well as market dynamics, with a focus on preserving ample liquidity and aligning growth in aggregate social financing and money supply with economic expansion and inflation targets, the report said.

China’s suspension of consumer goods replacement programs in some regions led to retail sales growth of 3.7% year-on-year in July, the weakest monthly pace so far this year, according to Wang Qing, chief macro analyst at Oriental Jincheng. However, with the release of CNY69 billion in national subsidies in late July, consumer spending is expected to rebound in August. Gao Ruidong, chief economist at Everbright Securities, observed that several economic indicators weakened in June, dragged down by extreme heat, falling prices and declining property sales. He added that investment momentum in traditional industries has diminished while expansion in emerging sectors has yet to fully offset the slowdown.

Authorities must prioritise domestic demand in H2 as the drag from U.S. tariff policy could increase as front-loading effects fade, according to Guan Tao, former senior official at the State Administration of Foreign Exchange. Guan highlighted that Chinese exporters did not return to the U.S. market fully following the Geneva trade truce in May. In April, China’s export growth rate to the U.S. lagged non-U.S. markets by 34.0 percentage points. The negative gap widened to 46.0 points in May and eased to 25.8 points in June, but remained at historically elevated levels, Guan added.