KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Investors have flocked to buy the yen in recent weeks, betting on favorable interest rate changes in Japan. However, the currency’s recent 5% gain against the US dollar could be at risk when the Bank of Japan (BOJ) meets next Wednesday.
Key Points:
- Yen Surge: The yen has risen about 5% against the US dollar since July 11, bolstered by suspected intervention by Japan. However, this rally is fragile, evidenced by quick retracements following strong US economic data.
- Market Sentiment: Swaps markets indicate a 45% chance of the BOJ hiking rates by 15 basis points at the July 31 policy meeting. Only 30% of BOJ watchers surveyed by Bloomberg expect a hike, though over 90% see it as a risk.
- Potential Disappointments: Yen bulls could be vulnerable if the BOJ fails to meet expectations for significant policy changes, or if the Federal Reserve dampens hopes for US rate cuts.
- Expert Opinions:
- Nick Twidale of ATFX Global Markets warns the BOJ might not tighten policy, which could revive carry trades that keep the yen weak.
- Other analysts, including those from BlackRock Inc., believe the BOJ may maintain its current stance due to patchy economic data and weak consumer spending.
- Market Reactions: The yen showed slight gains on Friday, trading at 153.65 per dollar after Tokyo's inflation data indicated accelerating consumer prices.
- Investor Behavior: Despite a significant yen move this week, Citigroup’s Nathan Swami noted additional demand for bullish yen options, suggesting cautious optimism.
- Hedge Fund Positions: Some hedge funds remain cautious, waiting to see the BOJ's next move. If the BOJ disappoints, the yen could weaken towards 158 per dollar, according to Rodrigo Catril of National Australia Bank Ltd.
- Carry Trade Dynamics: Even if the BOJ tightens policy, Japan’s ultra-low interest rates might still make the yen attractive for carry trades. The yen’s implied yields would remain lower than those for the Swiss franc.
- Fed Influence: The yen could weaken further if the Fed doesn't indicate a rate cut in September and US economic data strengthens, potentially testing 160 per dollar, as suggested by Charu Chanana of Saxo Capital Markets.
The upcoming BOJ policy meeting will be crucial in determining the yen's trajectory, with significant implications for investors betting on Japan’s monetary policy shifts.
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