I'm watching the Singapore dollar, are you?

Whenever the US dollar starts to weaken I always wonder if this is it. 'It' being that ever exploding US debts and deficits actually matter in the eyes of the holders of dollars. Rather that than the dollar, along with all other fiat currencies, just being an interest rate differential play as it was beginning in June 2021 (Jay Powell said he's thinking about trimming QE) through its peak in October 2022 (around the time the Fed finished its last 75 bps rate hike) when it rallied notably. I bring this up because just maybe, and I emphasize 'maybe', it will be the FX market that reflects the ever worsening US government financial situation initially instead of the US Treasury market. 

The currency that I'm focused on is the Singapore dollar because US yields remain about 100 bps above those seen in Singapore but the Singapore dollar is at a 10 yr high vs the US dollar. The Singapore budget deficit is less than .5% of GDP which compares to the US at around 6%. Yes, Singapore is a tiny nation state of just 6mm people, the size of a US major city and an amazing city it is, but fiscal responsibility in this case apparently matters for its currency. I've mentioned it a few times over the years but we remain bullish and long some Singapore stocks, and by extension the SGD. The Straits trades cheaply at 11x '24 eps and with a 5.4% dividend yield. 

As for the euro/yen heavy DXY, it's at its lowest level since July 2023 where it traded then for a few days below 100. That is the key level as if it breaks there convincingly, go back to April 2022 the last time it did. Outside of gold which is at a record high, in part because of the US dollar weakness, some commodities have recently bounced with the CRB raw industrials index at a 5 week high, but they remain well below their highs. Their performance from here will be key to watch as will import prices with the weaker dollar. We remain bullish and long energy, uranium, copper, precious metals and fertilizer stocks.