The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.
1016 ET - Recent attacks by Houthi rebels on Riyadh airport threaten to set back the recovery in Saudi Arabia's non-oil economy, even if the damage to the tourism sector proves to be limited, Capital Economics economist Jason Tuvey says. "Even if there are no further attacks, security fears may still deter tourists as well as business travel in the lead-up to the Future Investment Initiative due to take place later this month," he says in a note. The attacks are likely to heighten security fears, reducing footfall in sectors such as wholesale and retail trade, restaurants, and recreational services in particular. Still, the hit to non-oil GDP has been fairly limited, contracting by a modest 0.4% in the second quarter, Tuvey notes. (edward.frankl@wsj.com)
1008 ET - The Japanese yen could remain near current levels versus the dollar in coming months, ING analysts say in a note. Japan and the U.S. are uncomfortable with the dollar above 160 yen, they say. However, a move below 150 yen requires more caution from the Federal Reserve on raising interest rates and a much higher policy rate in Japan, they say. "That may not emerge until the second quarter of 2027." While growth in Japan is improving, the Bank of Japan probably isn't ready to accelerate tightening. The dollar rises 0.2% to a two-and-a-half-week high of 158.66 yen, LSEG data show, and ING expects it to trade at 158.000 over the next six months. (renae.dyer@wsj.com)
0957 ET - The Bank of England could avoid rapid interest-rate rises over the coming months if energy prices pull back significantly from current levels, AJ Bell's Russ Mould says in a note. Investors expect a 91% chance of a BOE interest-rate increase at the next meeting in November, and three more rate hikes by July 2027, LSEG data show. News about the U.S. deal with Russia to supply diesel caused oil prices to fall marginally in early Monday trade before turning higher again, with Brent crude last up 2.1% to $106.90 a barrel. (miriam.mukuru@wsj.com)
0954 ET - Bitcoin is stuck around the $83,000 mark, constrained by a mix of high U.S. interest rates and a 5.24% 10-year Treasury yield, XS.com's Simon-Peter Massabni says in a note. Those two factors have kept capital flowing in safer, interest-bearing assets instead of cryptocurrency as investors get more cautious about risk exposure, Massabni says. U.S. spot Bitcoin ETFs recorded $678.9 million in net outflows last week, he says. There's been a single session of positive flows, indicating that withdrawal pressure has eased, but that's not enough to show that demand through ETFs has recovered sustainably, Massabni says. (dean.seal@wsj.com)
0949 ET - Bitcoin is lower, but is still holding onto the $80,000 to $84,000 range. That's even as crude oil rises, a driver for inflation and a factor making assets like bitcoin less ideal to investors looking for more secure places to invest. Bitcoin's ability to maintain these levels is a positive sign for demand, says Lacie Zhang of Bitget Wallet in a note. "Bitcoin's ability to hold above the $80,000-84,000 area while Brent trades above $100-105 [a barrel] amid renewed Middle East tensions points to growing resilience and some degree of decoupling from traditional geopolitical risk," says Zhang. Bitcoin falls 1.2% to $82,643, while ethereum slides 0.2% to $2,530 and XRP is down 1.7% to $1.39. (kirk.maltais@wsj.com)
0928 ET - The Norwegian krone could rise further as fundamentals are supportive and oil prices remain elevated, ING analysts say in a note. Neither the risk of a rapid de-escalation in the Middle East conflict or a sharp oil price decline appear imminent at this stage, they say, noting Norway's position as a major oil and gas producer. Moreover, the krone benefits from a weaker euro on French fiscal concerns, which is offsetting the impact of a poorer liquidity environment, they say. The euro falls 0.1% to 10.6921 krone after earlier reaching a one-month low of 10.6835. ING expects it to reach 10.65 in one month and 10.50 in 12 months.(renae.dyer@wsj.com)
0927 ET - The Swedish krona could rise modestly if geopolitical tensions ease and French fiscal risks weigh on the euro for longer, ING analysts say in a note. The Riksbank is likely to raise interest rates by 25 basis points in November and signal further tightening, although external factors remain the main driver for the krona, they say. "While the krona remains a less attractive expression of eurozone fiscal risk than the franc or sterling, it was also notably cheap versus short-term fair value at the end of last month." The euro rises 0.1% to 11.2009 krona and ING expects it to reach 11.00 in six months and 10.75 in 12 months.(renae.dyer@wsj.com)
0925 ET - U.K. assets could face downward pressure heading to the October 28 budget due to concerns about public finances, Ebury's Enrique Diaz-Alvarez says in a note. "Given the renewed focus on fiscal sustainability among bond investors, this month's Autumn Budget remains a critical risk for both gilts and the pound." Investors will look to Treasury chief John Healey for reassurance that future spending plans won't lead to unsustainable debt, Diaz-Alvarez says. Ten-year gilt yields fall 1.5 basis points to last trade at 5.440%, Tradeweb data show. (miriam.mukuru@wsj.com)
0924 ET - Sterling hits a 16-month high versus the euro and could extend these gains if French debt concerns escalate, ING analysts say in a note. The euro could fall to 0.8200 pounds if French fiscal risks cause 10-year French-German bond yield spreads to widen to 250 basis points from 140 currently and the European Central Bank to take emergency measures, they say. However, this isn't ING's call. Instead, ING expects a more contained French crisis and the Bank of England to raise interest rates in November and February, keeping the euro in a range of 0.8400-0.8500 pounds for several months, with a "downside skew." The euro falls to 0.8443 pounds, its lowest level since June 2025, according to LSEG. (renae.dyer@wsj.com)
0922 ET - Credit rating agency S&P Global Ratings affirmed the U.K.'s AA rating on its government bonds and maintained a stable outlook on the economy. "The stable outlook reflects our view that the U.K. economy has remained, and will remain, resilient in the face of the energy shock emanating from the Middle East conflict," it said in a statement on Friday. S&P Global said that it could lower the rating if the U.K.'s cost of borrowing were to increase considerably alongside a sharp rise in public spending. (miriam.mukuru@wsj.com)
0759 ET - A significant Swiss franc appreciation would put the Swiss National Bank in a difficult position, Societe Generale's Kit Juckes says in a note. A break below 0.90 in the euro versus the franc despite a shift towards using the franc as a funding currency instead of the yen would "surely put the SNB in a bind." The SNB's policy rate is 0% while others are tightening monetary policy. If the SNB fails to stem sharp franc gains, the euro could fall to 0.85 francs, he says. The franc is "absurdly expensive" but the geopolitical backdrop remains favorable for the safe-haven currency. The euro rises 0.1% to 0.9308 after reaching a 10-week low of 0.9258 on Oct. 2, LSEG data show. (renae.dyer@wsj.com)
0746 ET - The price of bitcoin rose last week despite five consecutive sessions of heavy outflows from exchange-traded funds totaling $679 million, analysts at crypto data platform CoinMarketCap say. Its data found that 0.6% of total assets were liquidated last week, with Fidelity's Bitcoin ETF posting $380.3 million of redemptions. "The price rose 1% regardless because the selling was met by short covering, not by new spot buyers," says Alice Liu, CoinMarketCap research head. "That is a thinner floor than $84,000 looks." Bitcoin is 0.3% lower at $83,304.
