Bloomberg News

Barclays Robinson Expects Dollar to Gain, No Fed QE3

March 30, 2012

The dollar will outperform the yen and euro on prospects recovery in the world’s largest economy will drive up U.S. bond yields, said Paul Robinson, London-based global head of foreign-exchange research at Barclays Plc. (BARC)

U.S. data released this month have shown that payrolls gained last month, retail sales rose in February and consumer confidence remained near a one-year high in March, easing speculation the Federal Reserve will conduct a third round of so-called quantitative easing, or QE3. The economy will grow at least 2 percent every quarter over the next 12 months, economist estimates compiled by Bloomberg show.

“We don’t expect QE3,” Robinson told reporters in Singapore today. “What we are likely to see is U.S. dollar prospects improve relative to the other major currencies.”

The dollar fell 0.4 percent to 82.11 yen as of 9:10 a.m. in London from the close in New York yesterday, while it weakened 0.3 percent to $1.3338 per euro. The dollar may climb to 90 yen over the next six months and may rise to $1.2 per euro in the coming 12 months, Robinson said.

Two-year Treasury yields climbed to 0.41 percent on March 15, the highest since July, and stood at 0.34 percent today. Analysts forecast the rates may advance to 0.73 percent by the end of June next year.

Robinson recommended buying Canada’s dollar against the Swiss franc because the North American nation benefits from improvement in the U.S. economy and higher commodities prices.

“The Bank of Canada will be reasonably comfortable with the strengthening Canadian dollar while the U.S. economy is doing OK,” he said. “Switzerland desperately needs looser monetary policy.”

The Canadian dollar lost 0.5 percent to 90.47 Swiss centimes today.

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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