MS: trading on the FOMC
Analysts at Morgan Stanley developed scenarios of the FOMC meeting results and supplied them by the suitable course of actions for traders:
Scenario 1: No major policy changes
Actions: Initially sell USD against most currencies; buy risky currencies vs. JPY. Then start looking for lower levels to buy USD as the QE tapering should take place early next year.
Scenario 2: Some tapering without guidance
Actions: Buy USD vs. risky currencies; cautious about USD/JPY longs as yen will likely strengthen in the risk-off environment.
Scenario 3: Forward guidance
Actions: The stronger the forward guidance is, the better performance MS would expect from currencies which are highly sensitive to rate spreads and less sensitive to risk appetite. If we get forward guidance + tapering, GBP and CAD would outperform on the crosses.