Hot Spots From Yen Carry Trade to Resurgent EM Asia Gird for Fed
- Yen surges past 140 per dollar on bets of a 50-basis point cut
- Southeast Asian stocks have rallied ahead of decision
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A potential decision by the Federal Reserve this week that triggers a rally in the yen may unsettle emerging-market investors, reviving memories of the global volatility seen in August.
Last month’s yen rally, driven by the Bank of Japan’s rate hike, hit the EM carry trade hard and sparked the worst rout in the Nikkei 225 since 1987. This, combined with a significant miss in US nonfarm payrolls, led to a spike in Wall Street’s favorite volatility gauge, with US technology stocks suffering their worst start to a month since 2008.