Forex Flash: USD to be supported against majors in 2013 – RBS (Barcelona) - Brian Kim, G10 FX Strategist at RBS believes that relative growth differentials between the US and major developed economies will support USD in 2013.

He believes that the outlook for several G10 economies contrain plenty of downside risks though ongoing Fed large scale asset purchases will temper USD´s upside.

He expects further Euro weakening on growth/crsis concerns and due to lingering expectations of additional ECB policy easing. Yen could come under pressure for much of 2013, especially if the LDP win the upcoming election. He writes, “LDP officials have been vocal about aggressive policy easing. Additionally, Japan’s continued structural trade deficit will also help weaken JPY.”

Moving onto Sterling, Kim notes that it should remain resilient against EUR on its perceived safe haven status. He believes that the caveat is that additional BoE monetary accommodation and softer economic data still have GBP above its long term equilibrium on a trade weighted basis. Kim feels that EUR/GBP could remain supported, conditional on Eurozone developments, but GBP could weaken against USD is 2013.

Looking to G10 FX Volatility,, Kim believes that we should see a further repression in G10 currency volatility, especially if the BoJ ratchets up monetary policy easing. With none of the G10 central banks expected to tighten policy any time soon, a more widespread “lower for longer” approach by G10 central banks should result in narrow ranges again in many crosses.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.