Yen, emerging markets to see biggest impact of Fed cut in Asia
Smaller Southeast Asian markets may continue to do better than larger ones, while a significant rise in the yen might cause volatility in the Japanese market and high-performing chip stocks. Fear of an unwind in the yen carry trade has the potential to hit markets globally.
Investors are split on whether the Fed will kick off its easing campaign with a standard 25 basis point cut or a larger one. A half-point reduction may raise doubts about the health of the US economy, outweighing any enthusiasm about a stimulatory effect from the cut.
Here’s a look at what market participants are expecting.
Watching Yen
The yen’s trajectory is closely tied to expectations around Fed rate cuts. The currency surged past the 140 per dollar mark on Monday, reaching its strongest level this year, as speculation grew about a half-point cut.
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