The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1156 GMT - Bitcoin is facing a significant test of investor confidence after cryptocurrency exchange Binance was hit by a record $6.3 billion hack Thursday, Zaye Capital Markets analyst Naeem Aslam says in a note. "Although the exchange has maintained that customer balances remain protected and initiated the reopening of withdrawals, the incident has renewed concerns about centralized exchange security, liquidity management, and institutional counterparty exposure," he says. Binance users pulled $4.9 billion from the crypto exchange by Monday after services resumed Sunday, the FT reports, citing figures from data platform DefiLlama. Bitcoin trades steady at $77,807 after hitting a six-week low of $76,197 on Friday, LSEG data show. (renae.dyer@wsj.com)
1130 GMT - The cost of insuring French sovereign debt against default stays fairly high as fiscal concerns grow. Political uncertainty in France is causing fears about its public finances as borrowing costs climb. In addition, concerns about sluggish economic activity are weighing on investor sentiment. France 5-year sovereign credit default swaps trade at 97 basis points, significantly higher than the 77bps a month ago, and 29bps at the start of this year, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)
1056 GMT - The Bank of England could indicate that it is approaching the terminal rate during Thursday's policy meeting, Tickmill Group's Patrick Munnelly says in a note. The terminal rate is the peak interest rate during a central bank's rate-rise cycle. The BOE is widely expected to increase interest rates by a quarter point to 4.0% this week. Nonetheless, the BOE could resist current market expectations of three more rate hikes by July 2027. U.K. jobs data shows signs of cooling, Munnelly says. Markets price in 105 basis points of BOE rate increases by the end of 2027, slightly lower than 119bps priced in last week, LSEG data show. (miriam.mukuru@wsj.com)
1052 GMT - Yields on U.K. government bonds, or gilt, fall to multiweek lows as declining oil prices cause inflation fears to subside. Ongoing Iran peace talks are enabling oil prices to retreat, contributing to improved market sentiment. "The [energy prices] pullback moderates the immediate geopolitical risk premium," Tickmill Group's Patrick Munnelly says in a note. Investors have also slightly scaled back their expectations for Bank of England interest-rate rises to 106bps by the end of 2027, down from 119bps last week, LSEG data show. Ten-year gilt yields fall to 5.219%, a nearly six-week low, while 30-year gilt yields drop to their lowest in more than 12 weeks at 5.646%, LSEG data show. (miriam.mukuru@wsj.com)
1031 GMT - Manufacturing PMIs for October confirmed a solid performance for eurozone manufacturing, Leo Barincou at Oxford Economics says in a note. The PMI stood at 52.7 in October, largely unchanged from September. Resilience is being driven by fiscal stimulus, defense spending and the AI boom, which should continue to support activity in 2027, Barincou says. Most of this strength is concentrated in Germany, while Spain is also a bright spot, though manufacturing remains in contraction in France and Italy, he says. "Today's figures support our view that manufacturing remains an important source of resilience for the eurozone economy...However, strong demand combined with constrained supply is also keeping price pressures elevated," Barincou says, noting that input prices rose at their fastest pace since May. (don.forbes@wsj.com)
0958 GMT - The Norwegian krone falls along with oil prices on optimism over diplomatic efforts to end the U.S.-Iran conflict. President Trump said at the weekend that negotiations with Iran to end the war were "going fine" while U.S. Secretary of State, Marco Rubio, said the U.S. was open to a diplomatic solution. Brent crude drops more than 4% to $108.61 per barrel. The krone has a strong positive correlation to oil prices as Norway is a major oil and gas producer. The euro rises more than 1% to 10.3660 krone, LSEG data show. (renae.dyer@wsj.com)
0944 GMT - Indonesia's external trade position is expected to stabilize in 2H and remain in surplus through 2027, RHB economist Wong Xian Yong says in a note. However, the cumulative surplus is likely to remain modest as imports continue to grow faster than exports, he reckons. Export growth should receive support from manufacturing and selected commodities, he says. However, weaker Chinese demand for coal and industrial metals could weigh on shipments, he adds. Rising demand for imported industrial inputs and energy will keep import growth firm, limiting the scope for a larger surplus. The outlook will depend on global commodity demand, China's economic recovery and rising domestic industrial and energy import requirements, RHB says. (yingxian.wong@wsj.com)
0943 GMT - The dollar falls to a one-month low against a basket of currencies as oil prices ease significantly. Renewed diplomatic efforts to end the U.S.-Iran conflict ease concerns over Middle East supply disruptions, sending Brent crude down 4% to 108.91 per barrel. Investors are also looking ahead to the U.S. midterm elections on Tuesday along with tech earnings this week and the all-important U.S. nonfarm payrolls report on Friday. The DXY dollar index falls to as low as 101.426. The euro rises to an 11-day high of $1.1237, according to LSEG. Sterling rises a near seven-week high of $1.3449. (renae.dyer@wsj.com)
0937 GMT - Sterling faces some possible consolidation against the euro after its recent sharp appreciation but it is too early to expect a significant correction, ING's Chris Turner says in a note. Elevated energy prices should keep expectations for higher U.K. interest rates in place until early next year while French budgetary problems remain unresolved, he says. A potential 25 basis-point rate increase by the Bank of England on Thursday looks like a done deal, he says. "Upside economic surprises, U.K. fiscal policy seemingly heading in the right direction and warmer ties with the EU all seem to be helping sterling too." The euro rises 0.2% to 0.8355 pounds after hitting a 19-month low of 0.8317 Friday, LSEG data show. (renae.dyer@wsj.com)
0933 GMT - The dollar's potential to fall on the prospect of a Democratic sweep in Tuesday's midterm elections looks limited, ING's Chris Turner says in a note. One could argue that the dollar should fall on such an outcome as it would likely lead to a gridlock on the debt ceiling, a prolonged government shutdown next year and possibly encourage President Trump to pursue an even more activist foreign policy agenda, he says. "Many of those views are speculative, however." What isn't speculative is strong U.S. economic growth, high inflation and the Federal Reserve ready to raise interest rates again, he says. The DXY dollar index falls 0.3% to a 10-day low of 101.530. (renae.dyer@wsj.com)
0927 GMT - The retreat in oil prices eases inflation concerns, causing markets to slightly scale back expectations of interest-rate rises by major central banks. Brent crude falls 4.1% to $108.83 a barrel due to renewed diplomatic efforts to end the conflict between the U.S. and Iran. "Lower energy prices are providing some relief to inflation expectations and broader market sentiment, particularly after October's substantial rally in crude," Capital.com's Daniela Hathorn says in a note. U.K. government-bond yields fall sharply amid lower oil prices and by more than their eurozone counterparts, with 10-year gilt yields dropping around 5 basis points to a six-week low of 5.228%, LSEG data show. (miriam.mukuru@wsj.com)
0923 GMT - The value of total project awards across Saudi Arabia's industrial sector fell considerably this year as the Iran war dented the kingdom's momentum, J.P. Morgan's strategists say. Projects were down 45% year-on-year to $24 billion in September, mainly driven by a collapse in power and water sector awards, the bank writes. JPM says Saudi Arabia needs a full resolution to the Middle East conflict to see a sustainable return to growth, and the timing remains uncertain. Despite the decline, the long-term pipeline should offer strong growth opportunities beyond 2030 for both local and international developers, contractors and suppliers, with more than $420 billion planned across sectors, the strategists add.
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