Currency strategists at UBS AG note that quantitative easing will still have an impact, at least indirectly, on Australian and Canadian dollars as these currencies are very sensitive to risk and correlate with US equities. The advance of US stocks driven by the Fed stimulus plan may allow Aussie and loonie to build on recent strengthening.

In addition, the specialists believe that investors will be quite cautious ahead of G-20 leaders’ meeting that will take place in South Korea on this Thursday and Friday, so the market is going to be flat into the event before a big movement Wednesday afternoon and Thursday morning. Never the less, UBS analysts believe that the participants of the summit won’t reach any key agreements as the tensions over currency regimes and trade imbalances seem to be too severe.

UBS strategists also note that traders already have started easing up on bets on the single currency and British pound and recommend looking forward to the quarterly inflation report that is released by the Bank of England on Wednesday.

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