The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
0425 GMT - U.S. economic resilience supports further dollar gains, says Societe Generale's Kit Juckes in a note, retaining a year-end target of 1.10 for the euro-dollar pair. He says firm inflation, stronger-than-expected retail sales and GDP data out of the U.S. outweigh potential longer-term risks from tighter fiscal policy and increased congressional scrutiny of AI. "There may be storm clouds gathering beyond the horizon, but for now the U.S. economy continues to outperform most others," he says. "It is possible, though by no means certain, that U.S. fiscal policy will be tightened as the president and Congress struggle to reach agreement, and it is widely assumed that the AI industry will face greater congressional scrutiny," he adds. The dollar index rises 0.1% to 103.024. (jihye.lee@wsj.com)
0414 GMT - A divided U.S. government, following the midterm results, increases the probability that the use of executive actions could expand and lift tariff rates from about 10% closer to 15%, thus potentially maintaining an inflationary impulse, says Robert Sockin at PGIM. While the midterm results won't derail growth, they could lead to a slower-for-longer capex cycle where the AI-related contribution to U.S. GDP moderates slightly in 2027, the chief U.S. economist says. PGIM also continues to expect the Fed to hike rates by 100 bps with the next increase coming in December and quarterly thereafter. The asset manager now assigns a 40% probability to its base case of the U.S. economy overheating, down from 50% previously, while increasing its recession probability from a very low level to about 25%. (monica.gupta@wsj.com)
0403 GMT - Japanese government bond yields are lower as expectations for the Bank of Japan's fast-paced rate increases ease. Board member Toichiro Asada says the central bank needs to tread carefully when tightening policy, warning of the risk of higher rates hurting growth. Investors are focusing on developments in the Middle East and their implications for energy prices. Government bonds may also be supported by safe-haven demand amid continued worries over artificial-intelligence businesses' profitability. The 10-year JGB yield is down 3.0 bps at 2.760% and the 2-year yield is 1.5 bps lower at 1.840%. (kosaku.narioka@wsj.com; @kosakunarioka)
0352 GMT - The Australian dollar remains under pressure, trading at its lowest levels since March. Traders attribute the weakness to strength in the U.S. dollar as bets on further interest rate increases by the Federal Reserve continue to build. At same time, the market is moving toward pricing in interest rate cuts by the Reserve Bank of Australia. Markets are flirting with rate cuts from June onwards, says Sean Callow, a senior currency strategist at ITC Markets. Risk aversion around U.S. tech stocks is also driving the Aussie lower. At 0340 GMT, the Aussie was trading at 68.41 U.S. cents. (james.glynn@wsj.com; @JamesGlynnWSJ)
0330 GMT - The Indonesian rupiah's latest record low is primarily driven by dollar strength, with expectations of a Fed rate hike in December pushing the greenback higher, says iFAST research analyst Kok Jun Yong. "The rupiah is the currency least able to absorb that", he says. Lingering uncertainty over MSCI's proposed reclassification of Indonesia as a standalone market, alongside the removal of two Indonesian stocks in its November review, continues to weigh on sentiment, he adds. If the Fed raises rates in December, Bank Indonesia may need to follow suit to support the rupiah, Kok reckons. The dollar rises 0.55% to 18,240 rupiah. (yingxian.wong@wsj.com)
0329 GMT - India's consumer inflation likely accelerated to 6.0% on year in October from 5.5% in September, according to the median estimate of ten economists polled by The Wall Street Journal. That would be the highest reading this year and since the government revamped its consumer-price index data series in January. Inflation likely accelerated in October due partly to higher food prices and unfavorable base effects, Barclays Research says in a note. Non-food components may find relief from further moderation in precious metal prices, DBS economists say. Given the elevated inflation, the Indian central bank is likely to raise its policy rate again in December, DBS says. The inflation data is scheduled to be released Thursday. (kimberley.kao@wsj.com)
0308 GMT - A firmer dollar is again reasserting itself as the key headwind for Asian currencies, says MUFG's Lloyd Chan. The U.S. Dollar Index is above 103--the highest level since April 2025--as hot U.S. inflation pumps up bets for a rate increase by the Fed. The combination of a firmer greenback, higher U.S. yields and elevated oil prices create a tough near-term backdrop for Asian currencies, says Chan. The yen is once again approaching the potential intervention zone, within sight of the historically sensitive 160-163 range against the dollar, he adds. Southeast Asian currencies are retracing recent gains. The Indonesian rupiah touched another record low against the greenback. The dollar gains 0.5% against both the rupiah and the Philippine peso, and edges up 0.2% versus the Malaysian ringgit. (fabiana.negrinochoa@wsj.com)
0228 GMT - With markets pricing more than 25 basis points of Fed tightening by the year-end, the yen hitting 160 against the dollar again wouldn't be surprising, says Masahiko Loo at State Street Investment Management. The yen weakening toward 160 inevitably revives intervention talk, but markets may be underestimating Tokyo's toolkit, the chief fixed-income strategist writes. "Much of the focus remains on spot intervention, yet facilities such as the Fed's FIMA repo facility provide additional flexibility in mobilizing dollar liquidity without forcing outright sales of longer-duration U.S. assets." The mid-160s may be just another level to the market, but that range could attract a much stronger policy response than investors currently anticipate, Loo says. The dollar is last at 159.81 yen, LSEG data shows. (monica.gupta@wsj.com)
0159 GMT - Bitcoin remains under pressure in the morning Asia session as fresh AI jitters and Fed rate-hike bets keep sentiment in the crypto market risk-off. Bitcoin's tentative rebound has faltered in the face of worries about tighter regulation in the U.S., continued ETF outflows and heightened expectations of tighter monetary policy at the Fed after CPI surprised to the upside. Beyond the U.S., several major central banks are expected to keep monetary policy restrictive in the coming months as inflation pressures persist, says Mahmoud Mashal at VT Markets Dubai. That paints a bullish outlook for global yields, dimming the appeal of riskier assets such as cryptocurrencies, the senior analyst says. Bitcoin falls 0.9% to $73,633, LSEG data show, well below the psychological $75,000 mark. (fabiana.negrinochoa@wsj.com)
0023 GMT - Japan's Nikkei Stock Average is down 0.2% at 61107.14 as declines in electronics makers offset gains in chemical companies and trading houses. Advantest is down 3.4% and Murata Manufacturing is 2.5% lower, while Shin-Etsu Chemical is up 3.0% and Marubeni is 1.8% higher. The broader market index Topix is up 0.5% at 3947.61. The dollar is at 159.62 yen, compared with Y158.85 as of Wednesday's Tokyo stock market close. Investors are closely watching domestic earnings as well as crude oil prices. Bridgestone is set to announce its quarterly results later on Thursday. (kosaku.narioka@wsj.com; @kosakunarioka)
2347 GMT - Japanese stocks may rise as fears about the profitability of artificial-intelligence businesses ease, leading to a tech rally overnight. Nikkei futures are up 0.2% at 61505 on the SGX. The dollar is at 159.70 yen, compared with Y158.85 as of Wednesday's Tokyo stock market close. Investors are focusing on domestic earnings as well as crude oil prices. Bridgestone is scheduled to report its quarterly results later on Thursday. The Nikkei Stock Average rose 1.3% to 61248.59 on Wednesday. (kosaku.narioka@wsj.com)
2229 GMT - Intel investors aren't pleased with the news that Nvidia's top executive could be out. Shares are down 4.3% at $59.81 post market after The Wall Street Journal reported Nvidia's board is planning to oust CEO Jensen Huang. Intel is both a partner and a competitor of Nvidia, with the two companies rivals in the semiconductor industry. However, Nvidia also invested $5 billion in Intel stock in late 2025, becoming one of the company's biggest shareholders. The two companies are also working together to develop data center and PC products using Nvidia's chips.
Comments