Focus of the day:
"The Fed has stayed ‘patient’, but its reference to “international developments” has provided an additional angle to the Fed outlook, supporting the view of our US economist Ellen Zentner calling for the Fed to hike rates only in March 2016.
...The EUR has converted to a funding currency, suggesting that falling risk appetite would lead to higher EUR. However, falling risk appetite would be universally bearish for higher-yielding currencies that are dependent on capital inflows. Hence, we suggest aiming bearish trading strategies at the high-yielding and Asian currencies.
The EUR and other European currencies, with the exception of the CHF, could even rally against Asia and the high-yielding currencies.
Helping here too is continued CHF weakening, with possible intervention of the SNB pushing USDCHF and EURCHF higher. We reiterate our call for CHF weakness and expect the SNB to move towards a dirty float."
FX Strategy Team - Morgan Stanley
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