0859 GMT [Dow Jones]--Investors looking to move back into the carry trade--borrowing in euros to invest in higher yielding currencies elsewhere--following Thursday's ECB fireworks may have moved too soon, say currency strategists at Morgan Stanley. That's because the euro needs to be used as a funding currency, and its strengthening after the ECB press conference suggests the outflows from the euro-zone to support carry trades aren't happening yet. For the currency to act as a funding tool, euro-zone banks will have to provide credit to non-domestic entities or lend their balance sheet to non-EMU banks, helping them hedge their euro exposure," Morgan Stanley asays. But with euro-area bank claims against foreign accounts declining, the euro is not yet being used for funding purposes, "suggesting yesterday's hurry back into the carry trade may have been premature," the bank adds. (tommy.stubbington@wsj.com)
Contact us in London. +44-20-7842-9464
Markettalk.eu@dowjones.com
(END) Dow Jones Newswires
June 06, 2014 04:59 ET (08:59 GMT)
0 Response to "Euro-Funded Carry Trade Looks Premature - MS"
Thanks for give comment.