Bitcoin Rises After Czech Central Bank Chief Backs the Asset — Market Talk

0940 GMT - Bitcoin rises after Czech National Bank Governor Ales Michl said he wants the central bank to spend billions of euros worth of the country's reserves on the cryptocurrency. Michl told the Financial Times he would present a plan to the board to invest in bitcoin at Thursday's meeting. The CNB could eventually hold as much as 5% of its reserves in bitcoin. Michl highlighted wider investor interest in bitcoin and pointed to U.S. President Trump's plans for deregulation. Bitcoin rises 2.1% to $102,463, according to LSEG. ([email protected])0937 GMT - The Federal Reserve is entering a new phase in which interest-rate cuts will require more progress on inflation, say Natixis's Christopher Hodge and Jonathan Pingle in a note. With the U.S. labor market on firm footing, the Fed will now prioritize getting inflation back to target and will need to see a string of encouraging data before it resumes the cutting cycle, the analysts say. In line with market pricing, Natixis expects the Fed to keep the the target range unchanged. "The Fed successfully previewed that it is now in 'wait and see' mode and expect communication to emphasize the need for policy flexibility," they say. The 10-year U.S. Treasury yield falls about 3 basis points to 4.519%, according to Tradeweb. ([email protected])0932 GMT - The European Central Bank expects services inflation to decelerate considerably in 2025, allowing for more interest rate cuts, but stronger-than-expected services inflation could challenge that, RBC Capital Markets analysts say in a note. Over the past 2 years, seasonally adjusted services inflation numbers have been stronger in the first few months of the year, but weaker in later months, RBC says. If this trend continues and services inflation stays higher in the first half, it could result in fewer ECB rate cuts than expected, RBC says. ([email protected])0929 GMT - European government bond yields fall across the board but Swedish bonds marginally outperform German Bunds after the Riksbank cut interest rates by 25 basis points to 2.25% as expected. The 10-year Swedish bond yield falls about 3.5 basis points to 2.316%, while the 10-year German Bund yield declines 2.5 basis points to 2.538%, according to Tradeweb. Bond yields fall as prices rise. ([email protected])0919 GMT - Sterling could strengthen if U.K. Treasury chief Rachel Reeves delivers a convincing plan to boost economic growth in a speech at 1000 GMT, Monex Europe analysts say in a note. Reeves is likely to outline a set of measures that are well-received by markets, they say. "A convincing plan to boost activity would do much to improve sentiment, and to reverse the weakness that has haunted the pound in recent months." GBP/USD falls 0.1% to 1.2430 but EUR/GBP drops 0.1% to 0.8378 after earlier hitting a near three-week low of 0.8364, according to FactSet.([email protected])0918 GMT - "We are growing more than anybody else, and in a greener way than anybody else," Spanish premier Pedro Sanchez says, after the eurozone's fourth-largest economy booked a 3.2% expansion in 2024, well ahead of estimates for its European neighbors and ahead even of estimates for the U.S. Spain's push to using a greater share of renewable energy is not in opposition to economic growth, Sanchez tells a hydrogen energy conference in Madrid. "Rather, they are closely linked," he says. "The success of our energy model is also the base of the successful economic momentum that our country is seeing." ([email protected]; @joshualeokirby)0903 GMT - The Federal Reserve's January meeting seems very unlikely to shake up the market narrative, analysts at RBC Capital Markets say. Markets have been fully pricing a pause for much of the intermeeting period and Fed speakers have made no attempt to push back, the analysts say in a note. However, even as the Fed pauses, it will almost certainly maintain the cutting bias, they say. This is largely consistent with current market pricing, although RBC's modal call is for no additional cuts this year. In the absence of projections update, any potential market reaction likely hinges on Chair Jerome Powell's press conference, they say. The 10-year U.S. Treasury yield falls 3 basis points to 4.518%, according to Tradeweb. ([email protected])0902 GMT - The Swedish krona briefly falls after the Riksbank cut interest rates by 25 basis points to 2.25% as expected and refused to rule out further cuts. Sweden's central bank said its previous guidance to cut rates once more in the first half of 2025 essentially stands but it is "prepared to act if the outlook for inflation and economic activity changes." Several factors could affect economic developments and the policy rate going forward, it said. The Riskbank pointed to global uncertainties including U.S. and Europe fiscal policies and geopolitical tensions. It also highlighted risks related to the Swedish economy's recovery and the krona. EUR/SEK trades at 11.4690, little changed from levels before the decision, after briefly rising to 11.4805. ([email protected])0839 GMT - The euro has limited scope to rise given the threat of universal trade tariffs from U.S. President Trump, ING's Francesco Pesole says in a note. Trump said Monday that he wanted across-the-board tariffs that are "much bigger" than 2.5%. The risk premium on the euro versus the dollar is consistent with the resurging risk of tariffs, Pesole says. Confirmation that the U.S. Treasury is actively laying out plans for tariff implementation should prevent that risk premium gap from being closed, he says. "We don't expect [the euro] to trade much further from the current spot [against the dollar] by the end of the week." The euro falls 0.1% to $1.0425. ([email protected])0838 GMT - Yields on U.K. government bonds or gilts, decline, along with eurozone government bond yields ahead of major central banks' rate decisions this week. The Federal Reserve is expected to keep interest rates on hold at Wednesday's rate announcement while the European Central Bank is likely to cut rates by 25 basis points on Thursday. "[Investors] look forward to monetary policy updates from the Federal Reserve and the European Central Bank for further direction," Tickmill Group's Patrick Munnelly says in a note. The 10-year gilt yield falls 3bps to last trade at 4.580%, Tradeweb data shows. The 10-year Bund yield declines 2bps to 2.542%. ([email protected])0838 GMT - The Spanish economy can keep growing apace thanks to an energetic workforce and continued arrivals of tourists, Capital Economics' Adrian Prettejohn writes in a note to clients. Gross domestic product expanded 0.8% in the year's final quarter, allowing the Iberian nation to book a strong 3.2% annual increase, figures show Wednesday. A tight labor market, boosted by immigration, should keep household incomes rising, while lower interest rates in the eurozone will further boost consumption, Prettejohn says. "We think the [Spanish] economy will once again grow by around 3%" in 2025, he says.([email protected]; @joshualeokirby)0812 GMT - The Canadian dollar could fall further as the Bank of Canada is likely to refrain from any signals about nearing the end of its interest rate cutting cycle in a decision later, ING's Francesco Pesole says in a note. The BOC is widely expected to cut rates by 25 basis points, and hence the focus is on guidance about future decisions, he says. Given the risk of the Trump administration imposing tariffs on Canada, the BOC will likely "err on the dovish side" by favoring further rate cuts. "This means there are mostly downside risks for CAD today." ING sees the risk of USD/CAD rising above 1.45. It last trades up 0.1% at 1.4410. The BOC's decision is at 1445 GMT. ([email protected])