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18 Mar 2013
Forex Flash: FOMC unlikely to initiate any major changes - UBS
FXstreet.com (Barcelona) - This coming Wednesday, “the Federal Open Market Committee is unlikely to initiate any major changes,” says strategist at UBS Mansoor Mohi-uddin, who expands: “The Fed will keep its current pace of quantitative easing unchanged, and Chairman Bernanke will continue to stress that 'substantial improvement' needs to be seen first in America's labour market.”
“Nevertheless,” Mansoor adds: “investors should look at the revised Summary of Economic Projections that will be released with the FOMC statement. The Fed updates its economic forecasts every quarter. If the balance of FOMC participants' forecasts points more towards unemployment ending the year close to 7% from its current level of 7.736%, it will signal that FOMC members are expecting enough of an improvement in the labour market to start scaling back monthly asset purchases in the second half of the year. That will underpin our forecast for the dollar to recover to 1.20 against the euro by the end of 2013, and give renewed support to the greenback now as we end Q1'13,” the analyst concludes.
“Nevertheless,” Mansoor adds: “investors should look at the revised Summary of Economic Projections that will be released with the FOMC statement. The Fed updates its economic forecasts every quarter. If the balance of FOMC participants' forecasts points more towards unemployment ending the year close to 7% from its current level of 7.736%, it will signal that FOMC members are expecting enough of an improvement in the labour market to start scaling back monthly asset purchases in the second half of the year. That will underpin our forecast for the dollar to recover to 1.20 against the euro by the end of 2013, and give renewed support to the greenback now as we end Q1'13,” the analyst concludes.