UBS - "A stronger dollar remains our core view for 2013. The US economy is outperforming Europe and Japan as the latest purchasing managers' indices show. The Federal Reserve is likely to be the first of the major central banks to exit unconventional monetary policies. Dollar diversification by foreign central banks and sovereign wealth funds has ebbed, and America's energy revolution is cutting the US trade deficit. Dollar sceptics should take a look at USDCHF. The charts show it's forming a long term base. This matters as the currency pair is the closest proxy for the old USDDEM rate.
(...) This week's key points for currency markets are:
- US payrolls to surprise, stay bullish dollars
- beware ECB meeting in the week ahead
- Kuroda's Diet appearance to keep yen pressured
- UK PMI slump supports MPC doves, remain short Cable
- SNB will keep talking franc down
- don't fade Swedish krona strength for now
- RBA to stay on hold but remain bearish AUDNZD"
Mansoor Mohi-uddin, Managing Director and Head, Foreign Exchange Strategy at UBS Macro Research