SGD: USD/SGD - Looking To Retest The 1.2600 Area

Future action: The MNI analyst median for expected 2026 cuts is 50bp, with a range from zero to 125bp.

• The median analyst still sees the next cut coming in March, though several pushed back their easing views to later in the year after the December nonfarm payrolls data released earlier this month.
• Several analysts identified June as a logical point of resumption for rate cuts as it would/could reflect the first post-FOMC meeting with a new Fed Chair.

This update of our January 23 Fed preview includes analyst expectations - starting page 26 - Download Full Report Here

• None of the 31 analysts’ whose previews MNI read expected a Fed rate cut at the January FOMC meeting.
• Statement: Most analysts saw the description of economic conditions as largely “marked to market” at the January meeting rather than changed substantively, with the description of “moderate” growth upgraded slightly.
• More substantively, some analysts saw tweaks to the description of the balance of risks, potentially including the previous editions’ note that risks to employment had risen in recent months.
• There were almost no expectations that forward rate guidance would be changed but JPMorgan sees the removal of the word “additional” in the sentence “In considering the extent and timing of additional adjustments to the target range for the federal funds rate…”
• Dissents: All analysts who expressed an opinion said that it was likely/certain that Gov Miran would again dissent in a dovish direction. Several speculated he could be joined by Gov Bowman and/or Gov Waller, in descending order of probability.

The USD/JPY overnight range was 153.31 - 154.35, Asia is currently trading around {USDJPY Curncy}. USD/JPY has collapsed thanks to the FED checking rates implying should Japan intervene they will be supported . If the market's take is correct this is a big deal but as of yet it looks to have been little more than words, I feel there will need to be real and active intervention and the participation of the FED would need to be key to give it any real probability of success. For the moment the collapse lower has released a pressure valve causing leveraged funds and CTA’s to have to pare back large JPY shorts, but I suspect unless we get something more significant and clarity around FED involvement dips could remain supported and it will eventually turn back up. In today's Asian session, we could continue to see shorter term players and CTA’s continue to reduce, first sell-zone is 155.00 and then 156.00. The price though has moved quickly back toward the long-term support between 152-154 and I suspect buyers could start to return at some point. 

• Bloomberg - “Japan’s top currency chief Atsushi Mimura said authorities in Tokyo will respond to movements in the foreign-exchange market appropriately as needed in close coordination with their counterparts in Washington.”
• “Yen Intervention Would Create Opportunity to Short, Says CIBC AM. “Normally intervention fights against the fundamental tide and in this case Takaichi’s fiscal policy is not helpful, whether that’s to JGB yields or to the yen,” said Michael Sager, head of multi-asset and currency management at the firm” - BBG
• CFTC Data up to 20/01/2026 shows Asset Managers continued to pare back their JPY longs, +19404(Last +30177). The Leveraged community slightly decreased their large shorts heading into the BOJ, -89657k(Last -103741).
• Options : Close significant option expiries for NY cut, based on DTCC data: 157.00($886m). Upcoming Close Strikes : 153.75($1.226b Jan 29), 156.00($1.33b Jan 30) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 154 Points
• Data/Event : PPI Services, Machine Tool Orders YoY

Fig 1 : JPY CFTC Data

Source: MNI - Market News/Bloomberg Finance L.P