Bitcoin Could Attract New Buyers Over Time — Market Talk

1139 GMT - Bitcoin could attract new buyers over time if regulatory changes improve investor access and volatility falls, Standard Chartered analyst Geoff Kendrick says in a note. U.S. Securities and Exchange Commission data on fourth-quarter bitcoin purchases are "very encouraging" for this view, he says. While hedge funds once again dominated buying, bank buying was also strong. Abu Dhabi's sovereign wealth fund reported a 4,700 bitcoin equivalent position in Blackrock's iShares Bitcoin Trust exchange traded fund. "While this is small for now, we would expect the size to increase over time and, indeed, for other sovereigns to also start buying." StanChart expects bitcoin to reach $500,000 before President Trump leaves office in 2029. Bitcoin falls 0.7% to $95,761, according to LSEG. ([email protected])1119 GMT - Investors continue to expect the dollar to be the best-performing currency in 2025 although they hold slightly less conviction compared with a month ago, according to Bank of America's global fund manager survey for February. Some 31% of investors expect the dollar to outperform, compared with 41% in the January survey. The survey also shows 56% of investors consider the dollar to be overvalued, down from 58% last month. In the event of a full-blown trade war, the dollar is expected to be the second best-performing asset after gold. Long dollar positions are considered the second most crowded trade after long Magnificent 7 tech stocks that include Apple and Amazon. Long positions bet on an asset price rising. ([email protected])1117 GMT - Investors' fear of global recession hit a three-year low in February, according to Bank of America's February global fund manager survey. The survey finds that 52% of respondents expect a soft landing for the economy, where inflation is tamed without the economy slowing meaningfully. Investor probability of a soft landing rises for the first time in five months, the survey says. A scenario where the economy grows in an inflationary environment, also called 'no landing,' is expected by 36%, down from a 21-month high of 38%. A hard landing, where the economy slows or falls into recession as inflation drops, is expected by 6%, the survey says. ([email protected])1055 GMT - The dollar could fall if upcoming data show a further fall in U.S. business sentiment, Commerzbank analyst Volkmar Baur says in a note. Many U.S. companies initially reacted positively to President Trump's November election victory but the picture changed in January, he says. Companies are unsettled by the rapid succession and partial reversal of Trump's announcements, some of which lack key details. A number of sentiment indicators for February will be released in coming days including the New York Fed's Empire Manufacturing Survey at 1330 GMT. "If there are further setbacks, the dollar could face increasing headwinds." That's because the U.S. economic growth advantage is an important factor supporting the dollar. ([email protected])1052 GMT - German elections could mean more uncertainty for EU carmakers, HSBC analysts write. "We expected 2025 to be challenging for the EU auto industry, but current geopolitical developments look set to add another layer of challenge." The German elections could add to the uncertainty, especially if there is no clear winner, HSBC says. German car makers are already dealing with soft EU demand, price normalization, weak EV adoption and the need for supplier compensation. On top of this, there is the EU's 2025 carbon dioxide targets and the risk of a tariff escalation. "Policy uncertainty could well make a tough time tougher." Volkswagen is HSBC's preferred stock among the German auto markers, but it also has buy ratings on Mercedes-Benz and BMW. ([email protected])1034 GMT - The Canadian dollar's recent recovery looks premature given ongoing U.S. tariff risks, Commerzbank's Michael Pfister says in a note. Canada's trade negotiations with the U.S. will probably be rocky and there's scope for a somewhat stronger dollar in the short term, he says. "While we still see potential for lower USD/CAD levels, we think it could be several months before this happens." Meanwhile, data at 1330 GMT could show Canada's inflation accelerated slightly in January, but mainly due to base effects. The data would need to surprise market expectations significantly in either direction to change the Bank of Canada's stance. USD/CAD rises 0.1% to 1.4189, having reached a two-month low of 1.4152 Friday, according to FactSet. ([email protected])1006 GMT - German elections on Sunday and negotiations for a Russia-Ukraine peace deal could prove negative for the euro, Monex Europe analysts say in a note. Markets are pricing in a relatively benign German election outcome but this probably won't be the case, they say. "A protracted and difficult set of coalition negotiations looks likely and that should see the euro trading with a discount." In the Ukraine cease-fire negations, European countries have been side-lined and markets are too optimistic. This favors a weaker euro in the short-run. If significant U.S. tariffs materialize in coming months, the euro could reach parity versus the dollar compared to $1.0459 currently. ([email protected])1006 GMT - Only European pressure can bring about peace in Ukraine, France's top diplomat says as talks begin between the U.S. and Russia, without the presence of European or Ukrainian leaders. Europe's political leaders have gathered in Paris in response to their sidelining from peace talks, and are united over the need to ensure lasting peace for Ukraine following its full-scale invasion by neighboring Russia three years ago, Jean-Noël Barrot tells radio station France Info. Any peace agreement must dissuade Russia from any new aggression against its neighbors, the foreign minister says. And it is Europeans who can bring about security guarantees for Kiev, Barrot adds. ([email protected]; @joshualeokirby)1001 GMT - Slowing wage growth over the coming year should keep the Bank of England secure on its rate-cutting path, economist James Smith at bank ING writes in a note. Average U.K. wages grew more rapidly again at the end of last year, reaching 5.9%, figures show Tuesday. But other signs point to a loosening in the jobs market, which should translate into a gradual deceleration in pay packets, Smith says. Accompanied by an easing in inflation, "this should give the Bank more confidence to keep cutting rates," he says. ING expects the BOE to cut borrowing costs at a rate of once per quarter this year. ([email protected]; @joshualeokirby)0959 GMT - Stronger-than-expected U.K. jobs data could restrict the Bank of England to only one more interest-rate cut in 2025, Berenberg's Andrew Wishart says in a note. U.K. average wage growth excluding bonuses in the 3-months to December increased to 5.9%, from 5.5% in the 3-months to November. The strong increase in wage growth is likely to drive up U.K. inflation, reducing the chances of BOE interest rate cuts, Wishart says. Markets price in two interest-rate cuts of 25 basis points each in 2025, LSEG data show. ([email protected])0936 GMT - Sterling's gains following Tuesday's U.K. labor market data are unlikely to last, Monex Europe analysts say in a note. The data delivered a set of marginally better-than-expected figures. However, given concerns surrounding the quality of this data, "we are disinclined to read too much into this latest round of data," they say. Wednesday's U.K. inflation data should prove more significant for markets. This could come in lower than expected and weaken sterling, they say. EUR/GBP falls to a two-week low of 0.8291 after the data, from 0.8303 before the data, according to FactSet. GBP/USD rises to 1.2610, from 1.2601 beforehand.([email protected])0928 GMT - European defense stocks continue their steep upward trend in morning trade. U.S. and Russian officials are holding talks in Saudi Arabia on improving bilateral relations and potentially halting the war in Ukraine, and key European leaders discussed security guarantees for Ukraine in the event of a ceasefire deal. Germany's Renk Group was the top European defense performer, rising 8.6% at 31.7 euros, followed by sensors provider Hensoldt, up 4% at 48.16 euros. Shares in Italy's Fincantieri advance 3.7% at 8.76 euros, while those in Britain's QinetiQ increase 2.9% at 4.03 pounds. France's Thales and Germany's Rheinmetall lag behind, rising 1.5% at 180.05 euros and 1.65% at 949 euros respectively. Shares in Italy's Leonardo go up 1.2% at 34.66 euros. ([email protected])