TD Securities think “the Monetary Authority of Singapore (MAS) is not done with its tightening cycle and we expect another policy move in October. Given the upside risks to inflation and the current core inflation trajectory, we expect more gains in the S$NEER. Our analysis shows that the S$NEER historically trades towards the upper limit of the +/-2% policy band in a tightening cycle. We propose using a proxy S$NEER basket that includes only 6 currencies (CNY, USD, EUR, MYR, HKD, JPY) to trade the moves in the official S$NEER. Our G10 and EM forecasts suggest a possible retracement of the S$NEER by the end of Q3 and we see an opportunity to long the S$NEER proxy basket when the S$NEER trades back to 0.4-0.5% above the midpoint of the S$NEER band. We estimate that the S$NEER is currently trading at 1.24% above the midpoint of the band.”