The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0835 GMT - The dollar could rise if U.S. nonfarm payrolls at 1230 GMT are more positive than expected. This would strengthen expectations for the Federal Reserve to raise interest rates, Commerzbank's Michael Pfister says in a note. "While we still do not believe that the Fed ultimately intends to take this step, the market is unlikely to be deterred from continuing to bet on a rate hike." New Fed Chairman Kevin Warsh has refused to provide any clear indication of a potential rate rise and refrained from forward guidance. This puts greater emphasis on data, Pfister says. Commerzbank expects a 100,000 increase in July payrolls. The consensus in a Wall Street Journal poll is for an 83,000 rise. The DXY dollar index trades steady at 99.952. (renae.dyer@wsj.com)
0829 GMT - Hong Kong's investment is likely to see a lift from large infrastructure projects, according to HSBC in a research note. "There has been a notable push to accelerate the development of large infrastructure projects, namely the Northern Metropolis," the bank says. Northern Metropolis is a massive planning and development area in Hong Kong's New Territories. This should lift public investment, which will be backed by infrastructure bond issuance, HSBC says. The government may also push policies to drive up the private sector involvement in the development, the bank adds.(tracy.qu@wsj.com)
0823 GMT - Hong Kong's consumption is likely to remain steady, according to HSBC in a research note. "We also expect there to be improvement in services consumption demand, helped by improved tourism flow," the bank says. A push for mega-events, including cultural, sports and entertainment activities may also provide support to domestic consumption, it adds. Hong Kong will host world championships for the Hyrox fitness competition and other events, HSBC points out. (tracy.qu@wsj.com)
0818 GMT - Trade and AI are likely to support Hong Kong's economy this year, according to HSBC in a research note. "We see AI-led demand as a key tailwind that is set to continue given Hong Kong's heavy semiconductor exposure, which accounts for over 40% of goods trade," the bank says. Semiconductor trade has risen by over 50% year-on-year in recent months, HSBC says. It adds that improvement in mainland China-U.S. dynamics and strong mainland-linked trade may add support. (tracy.qu@wsj.com)
0816 GMT - Hong Kong's economy is likely to remain strong this year, according to HSBC economist Erin Xin in a research note. This is helped by trade and artificial-intelligence-related development, Xin says. "Consumption should remain steady, supported by improving wealth effects stemming from the property sector and stable monetary conditions," the economist says. HSBC lifts its 2026 GDP growth forecast to 4.5% from 3.8%, and maintains its 3% forecast for 2027 thanks to a stronger foundation. (tracy.qu@wsj.com)
0750 GMT - The euro-dollar exchange rate has showed a bigger reaction to recent U.S. nonfarm payrolls data and could be particularly sensitive to Friday's release, ING's Francesco Pesole says in a note. In the past year, the euro has moved on average of 0.2% in the hour after a payrolls report, he says. "The past two prints both saw moves of 0.4%, though, positive in July and negative in June." Data-related volatility in the foreign exchange market has increased under Federal Reserve Chair Kevin Warsh, he says. Warsh's ambiguity over future policy at the July meeting means the market's sensitivity to the jobs data at 1230 GMT could be even larger, he says. The euro trades flat at $1.1520. (renae.dyer@wsj.com)
0745 GMT - Bangko Sentral ng Pilipinas is likely to raise rates by another 25 basis points this month despite GDP growth slowing further in 2Q, according to Gareth Leather of Capital Economics. Economic growth has eased to 2.3% on year, the slowest pace of expansion since the pandemic. "The weakness of the economy is likely to influence the thinking of the central bank as it weighs its next move," the senior Asia economist writes in a note. However, with headline CPI rising 6.2% on year in July, it is still well above the BSP's 2%-4% target range. That could prompt the central bank to raise rates once more before halting its tightening cycle, Leather says. (amanda.lee@wsj.com)
0741 GMT - European indexes largely edge higher in cautious trade as investors hold ground ahead of U.S. jobs data and news on talks in the Middle East. The Europe-wide Stoxx 600 adds 0.2% as software and healthcare sectors lead. London's FTSE 100 edges up 0.2%, with oil majors gaining as oil ticks higher. A Diageo rally continues into a second day, with the stock up 1.5%. The German DAX gains 0.4%. Software giant SAP gains 3.5%, though Daimler Truck Holding slips 2.9% after posting earnings. In Paris, the CAC 40 is 0.3% up as Dassault Systemes adds 2.4%, while Thales gains 1.9%. Italy's FTSE MIB is flat, while the Spanish IBEX 35 slips 0.3% as banking stocks weaken. The AEX edges 0.1% lower in Amsterdam.(josephmichael.stonor@wsj.com)
0739 GMT - High oil prices from the Middle East conflict present a challenge for major central banks due to inflation concerns, Tickmill Group's Patrick Munnelly says in a note. Media reports indicate that a potential agreement to reopen the Strait of Hormuz could include restrictions on U.S. and Israeli ships, which could prolong the energy supply shock and keep oil prices elevated. U.S., eurozone and U.K. government bond yields climb as investors raise bets on central banks raising interest rates in the coming months. Ten-year gilt yields climb 2.3 basis points to 4.943%; ten-year German Bund yields increase 2.5 basis points to 3.146%; while ten-year U.S. Treasury yields are up 0.2 basis points at 4.672%, Tradeweb data show. (miriam.mukuru@wsj.com)
0736 GMT - China's exports are likely to remain solid in 2026, according to UOB economist Ho Woei Chen in a research note. "Robust artificial-intelligence-related investment globally is likely to continue supporting China's exports through the rest of the year," the economist says. That said, the re-escalation in the Middle East conflict could weigh on the outlook, she adds. UOB lifts its 2026 export and import growth forecasts to 17% and 22%, respectively, from 11% and 15% previously, citing stronger-than-expected trade performance. (tracy.qu@wsj.com)
0735 GMT - The Philippines's economy is likely to face challenges from higher inflation and external headwinds, ANZ Research's Kausani Basak and Jennifer Kusuma say in a report. Growth for 2Q slowed significantly, marking the fourth consecutive quarter of deceleration and weaker-than-expected data, they note. "A recovery in infrastructure spending from [3Q], as indicated by the authorities, will be a key determinant of whether growth can regain momentum." Inflation is expected to remain elevated for the rest of the year, particularly as El Nino-related supply pressures begin to feed through to food prices. ANZ expects 2026 GDP growth for the Philippines to ease to 3.9%, compared with 2025's 4.4% expansion. (amanda.lee@wsj.com)
0733 GMT - Yields on U.K. government bonds, or gilts, climb as oil prices rise on concerns over whether a deal will be reached between the U.S. and Iran to reopen the Strait of Hormuz. Media reports say Iran's semi-official news agency Fars on Thursday released details of a draft agreement between Iran and Oman that would ban U.S. and Israeli ships from transiting the strait. Bond yields rise as the prospect of a prolonged Middle East conflict lifts oil prices and revives inflation fears. Brent crude prices rise 1.2% to $83.5 per barrel. Ten-year gilt yields advance 2.5 basis points to 4.945%, Tradeweb data show.
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