The Singapore dollar was weaker against its U.S. counterpart late Friday as investors took caution ahead of a Group of 20 nations meeting this weekend, while downbeat domestic economic data also sapped some confidence.
Analysts say markets are looking to the meeting of G-20 finance and monetary officials in Mexico for signs of support for the euro zone and its bid to prop up debt-stricken Greece.
Meanwhile the U.S. dollar drifted as high as S$1.2585 from S$1.2552 late Thursday after government data showed that Singapore's manufacturing output in January contracted 8.8% from a year earlier, much more than the median 0.7% contraction forecast by 11 economists polled by Dow Jones Newswires.
"I think people are preparing for the weekend, and looking for news from the G-20 on what role it or the (International Monetary Fund) could play to support the Greece bailout," said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp.
For the rest of the session, she pegged resistance for the U.S. unit at S$1.2590, with support at S$1.2500.
"With inflation remaining high and signs of sequential growth bottoming, we think the (Monetary Authority of Singapore) will keep the (Singapore dollar's trade-weighted exchange rate) on a mild appreciation trend," Credit Suisse economist Wu Kun Lung said in a note.
"If the global growth indicators continue to pick up with no deterioration in the euro zone situation, and inflation continues to surprise on the upside, the market might start expecting the MAS to shift toward a more hawkish stance," Wu said.
Singapore government bonds rose especially, longer-dated notes, as some investors took caution and shifted their attention to safe-haven assets.
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