Morgan Stanley Says First Policy Meeting Under New Fed Chair Could Move Currency Markets

Morgan Stanley stated that the Federal Reserve chairman's first policy meeting this month may affect foreign-exchange markets and existing carry trades. The bank said the session could produce moves in currency prices and alter positions that rely on interest-rate differences between countries. No additional details on the expected size of any market reaction were provided in the statement.

Carry trades involve borrowing in a low-interest currency to invest in higher-yielding assets elsewhere. Changes in Federal Reserve policy can shift the relative value of those positions. The assessment comes as market participants prepare for the first rate decision under the current chairman.