Bitcoin Eases After Brief Return Above $100K — Market Talk

0952 GMT - Bitcoin eases after briefly returning above $100,000 following an unexpected fall in U.S. core inflation data Wednesday. The softer-than-expected inflation data and renewed optimism over potential crypto-friendly policies from U.S. President-elect Donald Trump boosted bitcoin earlier, Saxo Bank analysts say in a note. While bitcoin has returned below $100,000, analysts remain optimistic about further gains. Bitcoin falls 0.9% to $98,816 after hitting a one-week high of $100,805 overnight, according to LSEG. It reached a record high of $108,379 on December 17.([email protected])0933 GMT - The U.K. is likely to find it difficult to meet 2025 growth expectations after the slow growth in recent months, Berenberg's Andrew Wishart says in a note. Thursday's U.K. GDP data show the economy expanded by 0.1% month on month in November, while average growth in the three months to November was flat compared with the three months to August. "The smaller than anticipated 0.1% increase in GDP in November confirms that meeting the consensus GDP forecast of 1.4% in 2025 will be extremely challenging," he says. ([email protected])0912 GMT - A limping U.K. economy makes more rate cuts at the Bank of England likely, Investec economist Sandra Horsfield writes in a note to clients. The economy returned to growth in November but at a rate weaker than had been expected, figures showed Thursday. That means the BOE's policymakers will need to take more seriously the prospect of a disappointing performance in economic activity this year, Horsfield says. The BOE looks set to cut rates by 25 basis points at its meeting early in February, followed by a further three cuts by the end of the year, according to Investec's projections. "Below-potential growth adds to spare capacity and should, in the medium term, weigh on inflation," Horsfield says. "Tighter financial conditions from higher bond yields do the same."([email protected]; @joshualeokirby)0909 GMT - The euro is struggling to recover materially as concerns about a weaker eurozone economic outlook and political headwinds weigh, ING's Chris Turner says in a note. Lower-than-expected U.S. core inflation data on Wednesday offered a good opportunity for the euro to rally as two-year rate spreads narrowed but gains were modest. This perhaps "represents a conviction view that the eurozone and the euro will underperform this year on weak growth and weak leadership in the region." The euro edges up 0.1% to $1.0296. It hit its lowest in more than two years at $1.0179 on Monday. ([email protected])0857 GMT - U.S. Treasury Secretary nominee Scott Bessent is likely to maintain the strong dollar theme at his confirmation hearing later, ING's Chris Turner says in a note. Bessent on Wednesday said he wants to ensure the dollar remains the world's reserve currency and that the 2017 tax cuts and jobs act remains permanent. In the run-up to November's presidential election, he said tariffs are a useful negotiating tool. If tariffs are highlighted as a key tool in balancing government finances at Thursday's hearing, the dollar could rise, Turner says. "On balance, we think the dollar can stay bid today." However, if the DXY dollar index reaches 110 then the U.S. currency could see some profit-taking ahead of Donald Trump's presidential inauguration Monday. The DXY rises 0.1% to 109.158. ([email protected])0831 GMT - The yields on U.K. government bonds edge higher after U.K. GDP data revealed slow growth in November and flat growth in the three months to November. This follows Wednesday's sharp decline in gilt yields after below-forecast U.K. and U.S. inflation data, though analysts say concerns about inflation remain. "The combination of zero growth over the past three months and above target inflation, at 2.5% year on year, is a challenging one for policy makers and households," Moneyfarm's Richard Flax says in a note. The 10-year gilt yield climbs 1.5 basis point to 4.730%, Tradeweb data show. ([email protected])0817 GMT - The outlook for sterling remains negative after Thursday's weaker-than-expected U.K. economic growth data, Swissquote Bank analyst Ipek Ozkardeskaya says in a note. The economy grew 0.1% month-on-month in November after a 0.1% contraction in October but missed the 0.2% growth expected by economists in a WSJ survey. The data keep pressure on sterling after recent falls on U.K. fiscal concerns following a sharp selloff in U.K. government bonds which took yields higher, Ozkardeskaya says. Lower-than-expected U.K. inflation data Wednesday gave some brief respite to gilts and sterling, she says. GBP/USD falls 0.2% to 1.2220 and EUR/GBP rises 0.3% to 0.8427. ([email protected])0809 GMT - Heavy borrowing costs are weighing on the U.K. economy and the Bank of England's rate-setters will likely reduce some of that burden by cutting interest rates next month, Capital Economics' Ashley Webb tells clients in a note. Booking just a 0.1% increase in November, and set to stagnate over 2024's final quarter as a whole, the British economy is "hardly firing on all cylinders," Webb says. That is partly due to new taxes set out in October's budget. However, with the manufacturing industry also weakening, high interest rates are also taking their toll, he says. "Today's release revealed that the economy continued to have little momentum towards the end of last year," Webb says. ([email protected]; @joshualeokirby)0759 GMT - The dollar trades flat as it recovers some ground after falling on Wednesday's lower-than-expected U.S. core inflation data. Investors remain prudent about aggressively selling the dollar even though markets have brought forward expectations for the next Federal Reserve interest-rate cut, Unicredit Research analysts say in a note. "Indeed, the DXY dollar index remains slightly above 109, while the euro failed to extend its rebound above $1.03." The DXY trades flat at 109.049 and the euro rises 0.1% to $1.0298. ([email protected])0754 GMT - The turnaround of gilts on Wednesday was "particularly impressive", with the 10-year gilt yields sliding 16 basis points by the time markets closed, say Citi Research's Jamie Searle and Jussi Harju in a note. This came after below-forecast U.K. inflation data increased prospects of the Bank of England cutting rates and marked the biggest fall in yields since late 2023, the strategists say. However, inflation risks haven't gone away. Wage growth data--due Tuesday--is arguably more important than CPI data for gauging the interest-rate outlook, they say. With U.K. inflation likely heading higher during the year, softer wage growth is essential to allow the Bank of England to lower rates. "Still, peak pessimism for gilts may have passed, for now." ([email protected])0750 GMT - Eurozone government bond yields edge higher in early trade, bouncing from the previous day's rally, which saw yields fall by high single-digit or even double-digit basis points. U.K. GDP data for November showed a return to growth, albeit the outlook remains uncertain. "The U.K. economy looks to have returned to growth in November, but on balance this is another disappointing report," says Abrdn's Luke Bartholomew in a note. In the eurozone, government bond supply is due from Spain, which holds an auction for 2030-, 2037- and 2050-dated bonds, and from Ireland, which will syndicate new 2055-dated bonds with a preset issuance volume of 3 billion euros. The 10-year Bund yield rises 1 basis point to 2.540%, according to Tradeweb. ([email protected])0747 GMT - The FTSE 100 is expected to open 32 points higher, or 0.4%, according to IG. The index closed up 99 points, or 1.2%, at 8301 points Wednesday. Softer-than-expected U.K. inflation data Wednesday boosted equities on expectations that the Bank of England could cut interest rates twice this year, Swissquote Bank analyst Ipek Ozkardeskaya says in a note. U.S. stocks were lifted as an unexpected fall in core inflation data brought forward expectations for the next Federal Reserve rate cut to May, she says. Turning to Thursday's agenda, data showed the U.K. economy grew 0.1% month-on-month in November after a 0.1% contraction in October. Economists in a WSJ survey expected 0.2% growth. ([email protected])