Forex Flash: US investors poised to launch USD on a multi-year rally - UBS

FXstreet.com (Barcelona) - As Mansoor Mohi-uddin, Head of FX Strategy at UBS Macro Research notes, in a broad trade-weighted basis, the USD remains near its all-time lows, suggesting that "dollar bulls - looking for a multi-year greenback rally like those of 1978-1985 and 1995-2002 - anticipating the Federal Reserve will start scaling back its quantitative easing this year, appears the most likely trigger for a broader dollar recovery in 2013."

Mansoor adds: "But for a big turn in the greenback to be sustained, the behaviour of US fund managers, the largest holders of dollars in the world, will be key. During the major dollar bull runs in the 1980s and 1990s, US bond fund managers repatriated assets substantially. This pressured overseas markets while pushing the dollar to multi-year highs. The latest Fed Flow of Funds data suggests US investors are poised to do the same again from 2013."