Weak Sentiment Limits Bitcoin's Recovery — Market Talk
1046 GMT - Bitcoin rises slightly but remains below $90,000 following a recent selloff. Speculators betting on a sharp bitcoin recovery are disappointed as the crypto market remains battered by negative sentiment, Hargreaves Lansdown analyst Susannah Streeter says in a note. President Trump's tariff threats have shifted investors away from risky assets. A hack of the Bybit crypto exchange has also rattled sentiment. While bitcoin has recovered marginally, there's a long way to rise given the rapid rate of depreciation, Streeter says. "Without any firm moves from Trump to show his support for the crypto sector, nervousness looks set to continue." Bitcoin rises 2.3% to $86,387 after hitting a three-and-a-half-month low of $82,156 Wednesday, according to LSEG. ([email protected])1026 GMT - Switzerland's economic growth continued to outperform the eurozone in the fourth quarter. However, eurozone weakness is likely to weigh on Swiss activity, Pantheon Macroeconomics economist Melanie Debono says in a note. Swiss GDP grew 0.5% in the final quarter of 2024, up from 0.2% in the third and faster than the 0.1% growth in the euro area. Growth should hold steady in the first quarter but will likely slow after that, she says. Upcoming rate cuts from the Swiss National Bank should support investment and consumer spending, but a drag from exports could offset this. If tariffs on the European Union are as high as President Trump has suggested, or if the U.S. targets Switzerland directly, GDP will be even lower. ([email protected])0957 GMT - The euro faces a hit if President Trump's threatened tariffs against the EU prompt the European Central Bank to deliver consecutive interest-rate cuts, MUFG Bank analyst Lee Hardman says in a note. Tariffs could weigh on eurozone growth and encourage the ECB to keep lowering rates at every meeting, at least until rates moves closer to the so-called neutral rate that neither spurs nor slows growth, he says. Still, recent comments from ECB policymakers suggest rate cuts expected by markets in March and April are "far from a done deal." That suggests a risk that the euro could rise in the near-term, although MUFG still expects the key ECB rate to fall to 2.00% this year from 2.75% currently. ([email protected])0954 GMT - An easing of core price rises in Spain is good news for eurozone rate setters keen to bring interest rates down further, ING's Ruben Dewitte says. Headline HICP inflation was stable at 2.9% this month, figures show Thursday, but core prices--stripping out energy and some good prices--eased to 2.1% from 2.4% in January. While some European Central Bank officials have begun to suggest rates should be held rather than cut as the year progresses, the core easing shows that price pressures aren't intensifying, Dewitte says."[It] indicates that underlying price pressures are continuing to ease in Spain, helping the ECB move closer to its target inflation rate," he writes in a note to clients. ([email protected]; @joshualeokirby)0935 GMT - Treasury yields rise, reversing some of their recent sharp falls, after President Trump said he would impose a 25% tariff on EU goods soon. Analysts at Deutsche Bank Research say the rebound in yields is relatively limited, with Trump also raising hopes for another delay to tariffs on Canada and Mexico. Technicals play a part too, with the 10-year yield rebounding after touching the 200-day moving average, which traders consider a key chart level. The 10-year Treasury yield rises 5 basis points to 4.302%, having hit its lowest since mid-December at 4.245% Wednesday, according to Tradeweb. The two-year yield falls 4 basis points to 4.111%, having hit a four-month low of 4.065% Wednesday. ([email protected])0918 GMT - Gold futures slump to two-week lows on a stronger U.S. dollar and rising U.S. Treasury yields. Futures are down 1.2% at $2,896.50 a troy ounce, continuing to bounce off the record high of $2,794 an ounce it set on Monday's session. The U.S. dollar has gained on President Trump's latest trade policy remarks, threatening a 25% tariff on the EU but also raising hopes of another delay to Mexican and Canadian tariffs. A stronger dollar is typically a headwind for bullion, as a competing safe-haven asset and making it more expensive for international buyers to purchase dollar-denominated commodities. Market focus is turning to the upcoming Personal Consumption Expenditure report, set for release on Friday. The inflation report--the Federal Reserve's preferred inflation measure--could provide hints as to the Fed's pathway to monetary policy easing. ([email protected])0914 GMT - The Canadian dollar and Mexican peso rise marginally after President Trump raised hopes for another delay to tariffs on Canada and Mexico. Trump said a 25% levy on Mexican and Canadian goods could take effect on April 2 instead of the previously stated March 4 deadline. However, a White House official said the previous deadline remained in effect pending a review. If Trump's comments are taken at face value, it could provide some comfort that tariff hikes won't be implemented next week, MUFG Bank analyst Lee Hardman says in a note. That "could help to ease downside risks for the Canadian dollar and Mexican peso in the week ahead." USD/CAD falls 0.1% to 1.4332. USD/MXN drops 0.1% to 20.3947. ([email protected])0906 GMT - The recent strong performance of bonds globally could support demand at Thursday's auction of 3.25 billion pounds in January 2040-dated gilts, RBC Capital Markets strategists say in a note. Recent U.S. economic data have been weaker, energy prices have fallen while concerns about the impact of President Trump's policies on the economy have receded, they say. Ten-year U.S. Treasury yields dropped to their lowest since mid-December on Wednesday. "We think this potential shift in market narrative and macro backdrop should be generally constructive for outright demand at today's [gilt] auction." This is despite the gilt looking "rather unremarkable" on a relative value basis, they say. The yield on the 2040 gilt trades steady at 4.838%, Tradeweb data show. ([email protected])0838 GMT - The euro could fall further if a key survey show EU consumer confidence remained weak in February and investors sell the currency as part of month-end portfolio rebalancing, ING analyst Chris Turner says in a note. "Europe has a lot of untapped spending power (savings rates are high) if only confidence would allow that money to be put to work," he says. Further subdued confidence data would likely prove a "mild euro negative." The survey is due at 1000 GMT. The substantial outperformance of eurozone equities this month could also lead to some euro selling as institutional investors rebalance portfolios for month-end. The euro falls 0.1% to $1.0477. ([email protected])0827 GMT - Market reactions to tariff threats from Donald Trump have been relatively muted so far, RBC Capital Markets strategists say in a podcast. Many threats have yet to be carried through, with Trump reportedly considering delaying hefty tariffs on Canada and Mexico by another month. The uncertainty has also yet to be reflected in economic data. "The degree to which lingering tariff uncertainty impacts both market and general economic outcomes remains unclear. Economies are evolving regardless, with Europe and Canada seeing some improvement, while U.S. exceptionalism is perhaps fading," the strategists say. Trump on Wednesday threatened 25% tariffs on goods from the EU. The euro and eurozone bond yields fall slightly but the impact is limited for now. ([email protected])0821 GMT - India's economy is expected to have grown 6.3% on year in the October-December quarter, picking up from the previous quarter's 5.4% expansion, according to the median estimate of nine economists polled by The Wall Street Journal. The September-quarter drop was likely a one-off event, Barclays economists write in a note. Manufacturing output has been rising across sectors, and the end of weather disruptions, higher government spending and October's festive season all likely boosted demand, they say. DBS economists note that revisions to past data will also be released, which could change the growth profile. DBS estimates fiscal 2025 growth to average about 6.5%, and with February inflation expected to edge down toward 4%, the central bank will likely "stay on a calibrated dovish path." The GDP data is due Friday. ([email protected])0807 GMT - The dollar edges higher as President Trump's latest remarks on his trade policy plans increases uncertainty in markets, Zaye Capital Markets say in note. Trump on Wednesday threatened a 25% tariff on the EU, although he raised hopes for another month-long pause on tariffs for Mexico and Canada. "The ambiguity surrounding the proposed 25% duties on European imports has led investors to seek safe-haven assets, bolstering the dollar's value," Aslam says. Aside from tariffs, the second estimate of U.S. fourth-quarter economic growth at 1330 GMT could shift Federal Reserve interest-rate cut expectations and move the dollar if the data are weaker or stronger than expected, he says. The DXY dollar index rises 0.2% to 106.580. ([email protected])