UBS AG (UBSN), the world’s biggest wealth manager, is reducing its recommendation on the U.S. dollar versus the euro to neutral after the Federal Reserve opted to maintain its bond-buying program.
“The U.S. dollar was the most favored currency among speculative investors, no doubt partially due to widely-held expectations of a Fed ‘taper,’” Chief Investment Officer Alexander Friedman wrote in his monthly letter to client advisers yesterday. “As these expectations are revised in the coming weeks, we believe it prudent to close our long position in the currency relative to the euro.”
The Federal Open Market Committee unexpectedly refrained from reducing economic stimulus at its Sept. 17-18 policy meeting, choosing to “await more evidence that progress will be sustained.” Fiscal uncertainty regarding the debt ceiling is part of the reason why UBS forecast the Fed to only start tapering in December, Friedman said.
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