Bitcoin Bears Take Lead as Israel-Iran News Drags Crypto — Market Talk

0555 GMT - The top three cryptocurrencies by market capitalization are extending losses heading into the weekend, dragged by worries about the escalation in Iran-Israel tensions, FXStreet'sManish Chhetri says. The developments have triggered risk-off sentiment across markets, and price action suggests a further correction in Bitcoin, Ethereum and Ripple. If BTC closes below the 50-day exponential moving average at $102,447, it could retest the psychologically important level of $100,000, says crypto specialist Chhetri. A close below $2,410 for ETH could see it decline more to retest support at $2,000. BTC last down 1.7% at $104,249; ETH down 4.7% at $2,514. ([email protected])0547 GMT - The U.S. Federal Reserve is expected to keep its policy rate in the 4.25%-4.50% range on hold before cutting it in December, say analysts at Allianz Research. They have pushed out their rate-cut expectation from October. Allianz Research analysts' reason for their change of Fed call is that they now see inflation peaking at the beginning of 4Q rather than in 3Q. "The Fed is unlikely to ease monetary policy during the peak of inflation," the analysts say. Allianz Research's expectation also implies unchanged rates at next week's FOMC meeting, in line with money market pricing, amid uncertainty on tariff impacts. ([email protected])0537 GMT - The 10-year German Bund yield has continued to trade around the 2.5% level this week, waiting for a new driver, Barclays' rates strategists say in a note. "Markets remain stuck in the waiting room for a catalyst to emerge," they say. This week, various European Central Bank speakers reiterated the message from last week's policy meeting. This implies a need for pause in interest-rate cuts, having reached a neutral policy setting, but not ruling out a further cut later in the year, the strategists say. On Thursday, the 10-year Bund yield closed at 2.481%, down 5 basis points, according to Tradeweb. ([email protected])0530 GMT - U.S. Treasury yields fall amid renewed geopolitical concerns in the Middle East prompted by Israel's attack on Iran's nuclear facilities. However, market reaction could change direction fast, says Pepperstone's Michael Brown in a note. "Financial markets are always incredibly quick to price in geopolitical fear, but tend to be equally quick to discount it again, seeing the risk premium fade in short order," the senior research strategist says. Treasury yields fall by up to 3 bps across the board; the 10-year yield is down 3 bps at 4.327%, according to Tradeweb. ([email protected])0513 GMT - Israel's strike on Iran has put geopolitical worries back on the agenda, sparking sizeable risk-off moves, but that doesn't mean market participants should tear up long-term views, says Pepperstone's Michael Brown. While the situation remains highly fluid, he cautions that this market reaction has played out numerous times before. "Financial markets are always incredibly quick to price in geopolitical fear, but tend to be equally quick to discount it again." The bull case for equities remains intact, the senior research strategist reckons. The current weakness offers yet another dip-buying opportunity. Brown continues to be a fan of gold, which keeps proving it deserves a place in portfolios as a hedge against uncertainty, adding: "I'd not be touching crude with a bargepole for the time being." ([email protected])0451 GMT - The Bank of Japan still faces considerable inflation pressures, two rates strategists at DBS Group Research say in a research report. Japan's central bank has "incentive to further normalize policy settings," the strategists say. "However, the volatility of the yen and gyrations in the ultra-long tenors means a quicker rate hike path is difficult," they say. The JGB yield curve could undergo flattening pressure amid BOJ tightening and a potential tilt in bond issuance away from the long end and into the front-dated to belly tenors, the strategists add. JGB 2-year yield is down 1 bp at 0.740%, while 10-year yield is 5 bps lower at 1.405%. ([email protected])0446 GMT - The Philippine central bank is expected to cut its policy rate by 25 bps to 5.25% next week, says Aris Dacanay at HSBC Global Research versus an earlier expectation for a pause. The Philippines has seen low inflation recently and slow 1Q growth, the economist says in a report. As retail rice prices haven't plunged as low as global rice prices, there is still room for food and overall inflation to remain muted throughout this year. A rate would also help support the competitiveness of Philippines' business services exports, Dacanay adds. HSBC expects BSP to deliver the last 25 bps rate cut in 4Q, bringing the policy rate to 5.00% and then hold that rate throughout 2026.([email protected])0445 GMT - The interim volatility and disruptions from geopolitical tensions currently remain "under-accounted" in markets, Vishnu Varathan of Mizuho Securities writes in a note. The hope is that the U.S. could get the involved parties back to the table for negotiations, but the tail risk of an all-out conflict has increased, Varathan says. "Markets are on high alert, justifiably fearing a rapid escalation in the conflict, that my spiral into an unbridled war," Varathan writes. In the best-case scenario, if talks avert an escalation in conflict, oil prices could pull back to the $58-$65 range, from around $75 currently, Varathan adds. ([email protected])0325 GMT - The Singapore dollar along with other Asian currencies weaken against the U.S. dollar during the Asian session. Israel launched a wide-ranging attack on Iran's nuclear program and military leadership, striking dozens of targets in an operation that escalates tensions in the Middle East. The attack appears to have spooked investors to shift funds out of risky assets into safe havens such as the Swiss franc and the Japanese yen. USD/SGD edges 0.2% higher to 1.2811; USD/KRW rises 0.9% to 1,367.18; USD/CHF falls 0.4% to 0.8070; AUD/JPY loses 1.1% to 92.71. ([email protected])0322 GMT - Bank Indonesia is likely to cut its policy rate by another 25 bps to 5.25% next week, Nomura economists write in a note. This brings forward Nomura's previous forecast for the central bank's next cut to be in September. There are more signs of weakening domestic demand and continued FX stability, the economists say, adding that they expect the tone of BI's policy statement to remain dovish. The central bank may reiterate its assessment of seeing room to lower rates on cooled inflation and downside risks to the growth outlook, they say. However, Nomura reckons BI will continue to emphasize further cuts will be highly contingent on IDR stability, which remains its policy priority.([email protected])0221 GMT - Bitcoin falls early in the Asian session as news of Israel's attack on Iran spooks markets. The cryptocurrency, seen as a proxy for risk, slid to $102,811 before regaining some ground to last sit 2% lower at $103,909. Israel launched a wide ranging attack on Iran's nuclear facilities, rattling markets and sending investors fleeing into less risky assets. Safe havens such as the Swiss franc, yen, and gold have gotten a boost, and markets will stay focused on breaking developments throughout the day. Other altcoins such as Ethereum and Ripple were also lower, down around 6% and 4%, respectively. ([email protected])0210 GMT - The surge in oil prices may weigh on currencies of countries that depend on oil imports, MUFG Bank's Michael Wan says in a research report. These currencies include the Indian rupee and the Philippine peso, the senior currency analyst says. However, given the starting levels of inflation and current account deficits in these countries are "quite decent, it could take a sustained spike in oil prices to meaningfully change the trajectory of" Asian currencies, he adds. USD/INR is 0.4% higher at 85.9570 and USD/PHP is up 0.3% at 55.8854, FactSet data show. ([email protected])