Relative Value Comes Of Age
The dollar’s trajectory still depends largely on the path of US monetary policy, and yet predicting the Fed’s next move has now become much more difficult. Relative value trades cut out the US dollar, and their appeal has been enhanced by Wednesday’s FOMC decision.
The unexpected delay to QE3 tapering could be just a temporary postponement or it could signal a more fundamental change of heart at the Fed. UBS Economics thinks tapering will eventually commence in Q1 − but clearly it could be sooner, or it could be later.
Read the full report: UBS