UBS:USD to remain bullish in 2012

US economy continues its relentless recovery as shown by last week’s improved results in the labor market and the inflation data. In the same direction, the Philadelphia Fed man survey (10.3 act. vs. 7.3 prev.) and the Empire State man index (19.53 vs.13.48 prev.) both confirmed the foundations for this wave of economic growth are well placed. Why is this so important for traders and investors in the greenback? Simply, it rules out, at least in the near term, another round of quantitative easing. Reinforcing that conclusion, the FOMC minutes has unveiled that the majority of the voting members were supportive of no more relaxing in the monetary policy conditions.

According to M.Mohi-uddin, Managing Director of Foreign Exchange Strategy at UBS, this week’s reports are also expected to confirm the momentum in the economic fundamentals and to slowly get rid of the idea of more QE in the present year. “That keeps us underlying bulls on the dollar against the major European currencies and the yen”, he concluded.

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