Singapore: STI Index (.STI) inflation data lift odds of April pause by MAS
Singapore consumer prices rose less than expected in February, giving the central bank more room to align itself with its regional peers and stand pat when it reviews monetary policy next month.
According to the Department of Statistics, the consumer price index rose 0.5% in February from a year ago, edging higher from January’s 0.4% with private road transport and accommodation costs declining at a more gradual pace.
The increase was lower than the 0.6% estimated in a Reuters poll.
Core inflation, which excludes private road transport and accommodation as they are heavily influenced by government policy, eased to 1.5% from 1.7% in January. Prices of services, retail items, and electricity and gas rose at a slower pace during the month. Economists had expected February’s core inflation to pick up to 1.9%.
In a joint commentary on Monday’s data, the Monetary Authority of Singapore and the Ministry of Trade and Industry said external sources of inflation have receded in line with the sharp drop in global oil prices during the fourth quarter of last year.
The benign view of imported inflation contrasts with comments made in the October policy statement, when MAS said costs are likely to increase due to higher global oil and food prices. That view raised expectations of a third consecutive round of policy tightening in April.
Unlike most central banks, which stimulate or slow economic activity by adjusting interest rates, MAS sets policy by letting the local dollar rise or decline against an undisclosed basket of currencies. The central bank announces its policy stance twice each year, in April and October. Its current stance is to let the Singapore dollar appreciate around an estimated 1% annual pace.
Although supportive labor market conditions should underpin wage growth and continuing price pressures, inflation will be capped by greater competition in consumer segments such as telecommunications, electricity and retail, MAS and MTI said.
The two government agencies kept their core inflation forecast for 2019 at 1.5% to 2.5%, and the outlook for headline inflation at 0.5% to 1.5%.
“MAS policy action in April remains a close call, but we lean slightly toward standing pat,” Citi economist Kit Wei Zheng said in a note after the February data.
Jingyang Chen, an HSBC economist in Hong Kong, said the moderation in core inflation, combined with the relatively broad-based deterioration in the growth outlook would stay the MAS’s hand.
Singapore’s economy ended last year on a downbeat note, growing by just 1.9% year on year in the final three months, the slowest pace since the third quarter of 2016. The fourth-quarter growth was also well below the government’s own advance estimate of 2.2%.
The growth slowdown, and the weakening inflation outlook, come amid signs of softness in the global economy.
Last week, the U.S. Federal Reserve warned that economic activity has slowed and said it had no plans to hike interest rates for the rest of this year. The Philippines and Indonesia kept rates on hold, while Malaysia reported its second straight month of falling prices.
Singapore’s advance estimates of first-quarter growth are due on the same day as the monetary policy statement.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 3,235.22.
The projected lower bound is: 3,130.60.
The projected closing price is: 3,182.91.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 47.3080. This is not an overbought or oversold reading. The last signal was a buy 15 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.34. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 99 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -189.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 18 period(s) ago.
Rex Takasugi – TD Profile
STRAITS TIMES closed down -29.180 at 3,182.920. Volume was 5% below average (neutral) and Bollinger Bands were 47% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 3,205.61 3,217.05 3,182.19
Volatility: 8 10 15
Volume: 206,619,488 209,265,712 221,262,576
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
STRAITS TIMES gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
STRAITS TIMES is currently 0.0% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 16 periods.