UBS - "The foreign exchange markets reacted to America's March employment report by favouring higher-yielding emerging markets and commodity currencies. But US data is unlikely to remain 'not too hot' to spur fears of Federal Reserve tightening and 'not too cold' to raise concerns about the recovery. Instead Friday's payrolls report clearly showed America's economy emerging from the winter slowdown. The Fed is thus on track to finish tapering its bond purchases by the autumn, raising the risk the central bank considers hiking interest rates in the first half of 2015. The dollar is likely to rise as the Fed becomes one of the first major central banks to tighten monetary policy, putting renewed pressure on carry trades in emerging markets and commodity currencies.
This week's key points for currencies are:
- FOMC minutes due in the week ahead
- ECB hardens easing bias, euro a sell on rallies
- BoJ meeting key for yen in the week ahead
- BoE to keep policy unchanged, sell Cable rallies
- Swiss CPI still likely to undershoot, fade the franc
- payrolls key for Australian dollar in the week ahead"