FX volatility and pressure on major currencies will rise as traders digest the full implications of Fed tapering. Jeremy Stretch, Chief FX Strategist at CIBC, believes the Euro, in particular, has room to fall and sees good opportunities for the U.S. Dollar in the year ahead.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 3, 2014)

1. CHIEF FX STRATEGIST AT CIBC, JEREMY STRETCH, SAYING:

JOURNALIST: 'Jeremy, I know you're a fan of the Dollar in 2014. Which crosses should investors be watching?'

JEREMY STRETCH: 'Yes, absolutely right. I think there will be good opportunities in the US Dollar through the course of the year ahead partly due to Fed tapering but also due to the relative growth story which I think will be very favorable for the US. And for some of the crosses that I think are interesting I think Euro/Dollar has substantial room to fall certainly into the middle of the year. I think we can easily see that moving back into the 1.20s, maybe even as low as the mid 1.20s by the middle of the year. I think there's still more scope for both the Australian and New Zealand Dollars to come under a little bit of pressure as well although the Australian Dollar has also already fallen significantly in the last quarter. I think there is still more scope to get that back to the mid 0.80s. And I think also New Zealand I think has some downside risks particularly because the market I think is priced in too much as far as the RBNZ is concerned for this year.'

JOURNALIST: 'Okay, Sterling's also an interesting one and we've just had UK house price data that was very, very strong. You concerned about a housing bubble at all?'

JEREMY STRETCH: 'Well I think one has to be mindful of the risks of an uptick in the housing market. Certainly if you look at the data towards the end of last year, it does seem to be the case that the government's Help to Buy scheme has had an impact in terms of the housing market in pushing up prices. And so that does raise some risks about a bubble. But I think what we have to suggest is that if we are going to see ongoing recovery in the housing market through the course of this year, yes that may well encourage the Bank of England via the macro authorities to try and stem some of that house price gains. But I think we shouldn't be too sniffy about where growth is coming from as far as the UK is concerned because if we are going to see growth in the housing market pick up, that does see associated industries also benefiting and I think that will ultimately provide a more virtuous cycle for the UK economy.'

JOURNALIST: 'Now, Jeremy, the Bank of England and ECB meet next week. What do you expect to hear from that and what are the impact on currencies?'

JEREMY STRETCH: 'Well I think as far as the Bank of England is concerned, one would suspect that it will be very much a non-event. We wouldn't anticipate a statement being released. Yes, we know that the Bank are a little mindful of the strength of Sterling but I don't think necessarily there'd be any overt impetus in that regard. I think we will have to wait until next month when we get the quarterly inflation report and the subsequent press conference for any further language and rhetoric on the performance of Sterling. I think as far as the European Central Bank is concerned, I think markets will be very keen to focus on the disinflationary tendencies and also the lack of monetary growth when we do get those M3 numbers this morning. I think it's probably too early to expect any action from the ECB now but I think markets will be looking for any signs in the language that there could be further easing policies, not necessarily in terms of rate cut but perhaps further liquidity injections through the year ahead which I think will arrest the contraction on the ECB's balance sheet which I think is going to be an important dynamic in that weaker Euro trend that we're looking for through the course of this year.'