Forex Flash: USD weakness close to end and Yen risks increase in FY13 – UBS
FXstreet.com (Barcelona) - The UBS Economics team believe that the Fed's new round of asset purchases is largely priced into the currency markets.
They are continuing to look for opportunities to buy dollars now given the risks that other major central banks will need to ease policy further. They highlight Friday's October employment report as the next key event for the greenback followed by Bernanke's speech on Nov 20th to see what the Fed intends to do with Operation Twist when it expires at the end of the year. They note that "downside risks to EURUSD are building slowly, with Eurozone cyclical data remaining poor and little sign of Spain requesting aid anytime soon."
Looking to Japan, the team believe that the BoJ is likely to ease monetary policy again overnight, raising its quantative easing target for the APP by ¥10trn to ¥90trn in total. They believe that the major risk to the Yen in Q1 FY13 will occur as investors begin to anticipate a new governor taking command of the central bank. There are growing expectations that Governor Shirakawa's successor will likely have a more dovish disposition.
They are continuing to look for opportunities to buy dollars now given the risks that other major central banks will need to ease policy further. They highlight Friday's October employment report as the next key event for the greenback followed by Bernanke's speech on Nov 20th to see what the Fed intends to do with Operation Twist when it expires at the end of the year. They note that "downside risks to EURUSD are building slowly, with Eurozone cyclical data remaining poor and little sign of Spain requesting aid anytime soon."
Looking to Japan, the team believe that the BoJ is likely to ease monetary policy again overnight, raising its quantative easing target for the APP by ¥10trn to ¥90trn in total. They believe that the major risk to the Yen in Q1 FY13 will occur as investors begin to anticipate a new governor taking command of the central bank. There are growing expectations that Governor Shirakawa's successor will likely have a more dovish disposition.
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