UBS - "The Federal Reserve meets in the week ahead. The FOMC could surprise by agreeing to taper asset purchases, by revising its forecasts higher as America's fiscal outlook improves, by lengthening its forward guidance to signal interest rates will remain on hold for longer or by cutting the interest the Fed pays on excess reserves held at the central bank. The range of possible outcomes presents upside and downside risks to the dollar in the near term. In the longer-term the strengthening US economy will help the greenback recover lost ground in 2014.
This week's key points for currency markets are:
- FOMC meeting presents several risks to the dollar
- ECB reluctance to ease again makes Fed key driver of euro
- BoJ meeting key in the week ahead for yen
- sterling unable to rally despite Weale's hawkish dissent
- Stevens hardens rhetoric against Australian dollar
- RBNZ turns more hawkish benefiting NZ dollar
Head, Foreign Exchange Strategy
UBS Macro Research"