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Hardy: The creeping signs of fear in the FX markets

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The chief focus in forex this week is Wednesday's FOMC meeting. Saxo Bank's Head of FX Strategy, John Hardy, says there's a slim chance the Fed could up its taper to USD 15 billion per meeting, while keeping its message of low interest rates to the fore. It's also one of those quarterly meetings that sees a revision of economic and policy forecasts, known as the "dot plot". 
Also weighing on investors' minds is the increasing turmoil in Iraq. Oil prices have recently spiked to a nine month high as tensions there, and elsewhere in the world, add to a "creeping fear" in the markets.
Also of note this Monday, GBPUSD took out 1.70 for the first time since August 2009. John says the likelihood of a rate rise in the UK this year has dramatically risen. Other markets remain muted, he says, with JPY remaining steady, weaknesses in emerging market currencies but stronger performances by the likes of the Aussie and Kiwi dollars.