Bitcoin Could Extend Losses Amid Trade War Fears — Market Talk

1110 GMT - Bitcoin could extend its losses as risk sentiment sours on concerns over a global trade war, Hargreaves Lansdown analyst Susannah Streeter says in a note. Only an intervention of support from the Trump administration will likely prevent cryptocurrencies falling further away from the highs reached after November's presidential election, she says. While Trump signed an executive order in his first week of office pledging to go light on crypto regulation, this has underwhelmed investors. The extent of the crypto selloff this week is a "stark reminder not to speculate in this highly risky asset class with money you can't afford to lose," Streeter says. Bitcoin falls 5% to $80,086, having reached a three-and-a-half-month low of $78,273 earlier, according to LSEG. ([email protected])1057 GMT - Sterling has further scope to rise against the euro given U.K. Prime Minister Keir Starmer's relatively warm relationship with President Trump, ING analyst Chris Turner says in a note following Thursday's meeting between the leaders. "Whether the U.K. and the U.S. can secure a new trade deal remains to be seen, but certainly the U.K. is less exposed to tariffs than its European counterparts." EUR/GBP could fall to 0.8225 next week, he says. EUR/GBP last trades flat at 0.8257 after hitting a two-month low of 0.8241 Thursday, according to FactSet. Trump said Thursday he would press ahead with 25% tariffs against Mexico and China on March 4 and impose an additional 10% levy on Chinese goods. ([email protected])1052 GMT - Next Friday's monthly U.S. jobs report, including non-farm payroll data will provide the latest clues on the strength of the labor market, says S&P Global Market Intelligence. Given the Federal Reserve's dual-mandate of price stability and maximum employment, these data are key for the Fed's future steps. Although January data showed below-consensus growth in jobs it also showed the unemployment rate falling to 4.0% from 4.1% and wage growth edging up to 4.1% from 3.8%. Thus, labor data were widely seen as supporting the Federal Reserve's shift to a slower pace of rate cuts this year, "albeit awaiting more signs as to how the economy is faring since the presidential election." ([email protected])1041 GMT - The debate about the European Central Bank's right monetary policy course is likely to become increasingly controversial in the coming months, says DZ Bank Research's Christian Reicherter in a note. "One indication of a more cautious approach would be if the central bank were to refrain from characterising the current monetary policy stance as restrictive in its monetary policy statement," the analyst says. At next week's meeting, DZ Bank Research expects a 25 basis-point rate cut which would bring the deposit rate to 2.50%. This is the broad expectations of markets, according to LSEG. ([email protected])1027 GMT - The U.S. dollar will likely strengthen further if President Trump's latest tariff threats materialize, says Chang Wei Liang of DBS. The DXY U.S. dollar index surged past 107 overnight after the President Trump said the planned 25% tariffs on imports from Canada and Mexico will take effect on March 4, along with another 10% levy on Chinese goods. Both the Canadian dollar and the Mexican peso weakened against the greenback, though Chang notes that their declines weren't significantly larger than those of other currencies. "Trump's inconsistent messaging on the timing of tariff implementation and conditionalities around them have made markets more reluctant to position aggressively to these threats," the forex and credit strategist says. The DXY dollar index rises 0.1% to 107.37. USD/CAD is flat at 1.4437; USD/MXN is 0.1% lower at 20.4310, according to LSEG. ([email protected])0955 GMT - Signs of cooling in eurozone inflation could bolster those rate setters who favor more cuts to interest rates this year, Capital Economics' Franziska Palmas writes in a note to clients. The rate of inflation cooled markedly in February in France and several large German states, and was stable in Spain, figures this week show. That makes eurozone inflation likely to have dropped back, including in core prices, Palmas says. "This would support those on the ECB's governing council arguing for further rate cuts even beyond next week's meeting," she says. ([email protected]; @joshualeokirby)0944 GMT - Underlying prices are losing heat in France, Pantheon Macroeconomics' Claus Vistesen writes in a note to clients. The rate of inflation eased markedly this month, falling below 1% on year for the first time in four years, figures show Friday. A large part of that was due to changes in regulated electricity prices, which saw energy bills drop compared with a year earlier, but core prices also look to have lost heat as services inflation eased, Vistesen says. Still, France is likely to be an outlier, withinflation in the wider eurozone set to have cooled much less this month, he says. ([email protected]; @joshualeokirby)0928 GMT - The Mexican peso is holding up well compared to the Canadian dollar as Mexico is more likely to reach a trade deal with the U.S., ING's Chris Turner says in a note. That's because Mexico has got more to lose after President Trump confirmed he would press ahead with tariffs against Mexico and Canada on March 4, he says. "The chances of a deal with Canada might be lower," Turner says. "Canada might be more resistant to being bounced out of other trade agreements, such as the CPTPP." USD/CAD could rise to 1.48 if tariffs are implemented, he says. USD/CAD trades flat at 1.4441 after earlier hitting a three-week high of 1.4454, according to FactSet. USD/MXN falls 0.2% to 20.4473. ([email protected])0917 GMT - Gold futures continue to pull back from recent highs. Futures are down 0.9% at $2,870 a troy ounce, after setting a record high of $2,974 an ounce on Monday. The precious metal is on track to end the week 2.8% lower, snapping an eight-week streak of gains. Gold has been pressured lower by a stronger U.S. dollar, which has gained on fresh tariff concerns, says Swissquote Bank's Ipek Ozkardeskaya. While a pullback after having flirted with the $3,000 level is healthy, the outlook for gold remains positive on the back of tense global geopolitical environment, Ozkardeskaya writes. Markets now turn their attention to U.S. Personal Consumption Expenditure data, due for release later Friday. PCE data is the Federal Reserve's preferred inflation measure, and could provide hints on the U.S.'s pathway toward monetary policy easing. ([email protected])0916 GMT - Whether China's home prices can bottom out this year will largely depend on external factors, Macquarie economists write in a note. China's policymakers will do what's needed to meet their expected 5% GDP growth target, they say. Five years ago, a pickup in exports provided policymakers with the window to crack down on the property sector, they note. Any slowdown in Chinese exports due to Trump's tariffs policy could push Beijing to support the property sector, Macquarie says. There have been some positive signs in the sector, including falling housing inventory and rental yields have exceeding the Chinese 10-year treasury yield, the bank adds. If trade war 2.0 intensifies, policymakers are likely to release stimulus later this year to help support the sector, which would be key to supporting China's growth, Macquarie says.([email protected]; @ivy_jiahuihuang)0842 GMT - The euro is at risk of further falls as markets are not fully priced for the prospect of a global trade war, ING analyst Chris Turner says in a note. President Trump said 25% tariffs against Mexico and Canada will go ahead on March 4 along with an additional 10% tariff on Chinese goods. Any news of Canada and Mexico cutting a deal with the U.S. could see the euro recover, Turner says. "But for the time being, the threat of tariffs and their impact on global growth is euro negative." Investors could adopt more defensive positions ahead of next week's tariff deadline. The euro trades steady at $1.0399 after hitting a two-week low of $1.0381 overnight, according to FactSet. ([email protected])0832 GMT - Expectations of higher EU fiscal spending and balance-sheet reduction by the European Central Bank could largely offset the impact from lower interest rates on bonds, says SEB Research's Jussi Hiljanen in a note. SEB maintains a view that the 10-year German Bund yield will continue to trade in a range between 2.20% and 2.60% in the coming months, the chief strategist for euro and dollar rates says. Eurozone 10-year bond yields trade around 3 basis points lower across the board, with the 10-year Bund yield down 3 basis points at 2.383%, according to Tradeweb. ([email protected])