UBS - Fed new policies likely to keep Dollar constrained as the new year starts

UBS - "(...) The Fed's new policies are likely to keep the dollar constrained as the new year starts but will support the currency in 2013 as the US economy keeps recovering. That means the greenback is likely to stay at current levels of 1.30-1.32 against the euro for now but recover back to 1.15-1.20 next year.

(...) In our last comment here for 2012, the key points for currencies are:
- new Fed policies tempering dollar for now, to bolster it later
- ECB watchers should pay attention to German IFO
- latest polls suggest strong LDP showing, stay bullish USDJPY
- Carney points to new thinking at the BoE
- SNB makes little changes, 1.20 EURCHF floor remains
- Riksbank will cut rates in the week ahead
- Australian dollar pricing in all the good news now"
Mansoor Mohi-uddin, Managing Director and Head, Foreign Exchange Strategy at UBS Macro Research

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