Bitcoin Remains Weaker as Slump in Chip Stocks Broadens — Market Talk

1141 GMT - Bitcoin stays under pressure as the selloff in chip stocks deepens, weighing on risk appetite. Nasdaq futures point to a 0.8% fall in the tech-heavy U.S. stock index. Investors are cautious with positioning ahead of the Federal Reserve's policy decision on Wednesday and earnings from major U.S. tech companies amid renewed concerns over the scale of AI-related spending, Capital.com's Daniela Hathorn says in a note. "Investors are becoming increasingly selective this earnings season, with strong revenue growth no longer enough to satisfy markets unless accompanied by evidence that elevated spending is translating into sustainable profitability." Bitcoin falls 2.2% to $63,462 after reaching an 11-day low of $63,038 overnight, LSEG data show. ([email protected])1124 GMT - Market pricing of around 1.5 interest-rate hikes by the European Central Bank this year might be excessive, providing some cushion to German government bonds in case of renewed oil price rises, Metzler analysts say in a note. One-and-a-half rate raises would mean interest rates would rise by 37 basis points, according to LSEG. Metzler expects fewer interest-rate hikes than that. "We see support for the entire curve stemming from monetary policy with the greatest impact, naturally, at the short end," analysts Leon Ferdinand Bost and Yannik Mosbach say. Short-term yields have somewhat decoupled from the oil price and consequently Metzler sees a certain "margin of safety" against rising Brent prices, they say. The ECB raised interest rates in June and left them on hold in July. ([email protected])1040 GMT - A further selloff in gold prices would be needed for the Swiss franc to remain weak, TD Securities strategists say in a note. Market participants have attributed the franc's weakness to the prospect of the Swiss National Bank keeping rates at 0% while other central banks raise rates. However, the currency also shows a strong correlation to falling gold prices, they say. "As we see limited scope for a prolonged global rate hiking cycle and only modest gold price downside, our foreign exchange forecast has euro-franc staying around 0.93 into year-end." The euro trades flat at 0.9315 francs after reaching a six-month high of 0.9321 earlier, LSEG data show. ([email protected])1039 GMT - German economic output rose somewhat in the second quarter despite headwinds from the war in Iran, the Bundesbank says in its July monthly report. "The current picture painted by the indicators suggests a somewhat higher underlying pace of economic growth than was expected in the Bundesbank's June forecast," it says. Continued resilience in the industrial sector, helped by robust foreign demand and growing exports helped GDP to increase slightly in the quarter, the bank says. German exporters also benefited as international competitors were more severely affected by supply bottlenecks. Consumers were relatively unaffected by the high energy prices, and have kept their consumer spending at least stable, it notes. German 2Q GDP data are due Thursday. ([email protected])1035 GMT - U.S. Treasury yields fall as oil prices drop and investors hope for a diplomatic solution in the Middle East. The dollar rises to a one-month high against a basket of currencies before Wednesday's Federal Reserve's rate decision and on safe-haven demand as a tech-stock selloff deepens. The Fed is expected to hold interest rates but could stress inflationary risks from high energy prices, while a hike isn't out of the question. "The Fed will have no choice but to strike a hawkish note on Wednesday," Ebury's Matthew Ryan says in a note. Money markets price a 34% probability of a Fed rate hike, according to LSEG. The 10-year Treasury yield falls 1.9 basis points to 4.622%, according to Tradeweb. The DXY dollar index hits a high of 101.640. ([email protected])1027 GMT - The cost of insuring euro-denominated credit against default declines as U.S. and Iran pause hostilities. Markets hope for a resolution to the conflict and the reopening of the Strait of Hormuz. "Oil's sharp drop after the U.S. paused military strikes against Iran suggests investors are becoming more confident that diplomacy can prevent a prolonged disruption to global energy supplies," eToro's Lale Akoner says in a note. The iTraxx Europe Crossover index of euro high-yield credit default swaps falls 1 basis point to 260bps, S&P Global Market Intelligence data show. ([email protected])1019 GMT - The dollar rises to a one-month high against a basket of currencies and could remain in demand as a safe haven, XM analyst Achilleas Georgolopoulos says in a note. Ahead of Wednesday's uncertain Federal Reserve decision and a batch of tech earnings, risky assets are in retreat, he says. AI concerns are playing a key role weighing on sentiment, he says. "Notably, the U.S. data calendar is much richer today, with a strong Conference Board consumer confidence index reading potentially adding to Fed rate hike expectations and further denting risk appetite." The survey is due at 1400 GMT. The DXY dollar index rises to a four-week high of 101.573. ([email protected])0939 GMT - The Swiss franc could continue to struggle due to the Swiss National Bank potentially keeping interest rates low and the U.S. imposing new tariffs against Switzerland, Commerzbank's Michael Pfister says in a note. Markets are pricing a rate rise by June 2027, leaving potential for disappointment if the base rate is held at 0% until the end of next year, he says. Fresh U.S. tariffs against Switzerland come at a time when Swiss exports to the U.S. haven't recovered from last year's slump, he says. The dollar rises 0.1% to 0.8193 francs after reaching a 13-month high of 0.8199 earlier, LSEG data show. The euro rises 0.1% to 0.9316 francs after hitting a six-month high of 0.9321. ([email protected])0919 GMT - Short-maturity and medium-maturity high-quality bonds offer favorable risk-return balance, making these assets attractive, UBS Global Wealth Management's Mark Haefele says in a note. Inflation pressures could fade over the coming months, reducing the prospects of major central banks increasing interest rates, Haefele says. This would likely cause bond yields to fall, he says. "We recommend locking in currently elevated yields." ([email protected])0908 GMT - Sterling could fall if the Bank of England keeps interest rates steady Thursday and dampens expectations for rate rises later this year, Monex Europe analysts say in a note. The market is fully pricing a rate rise by November but this looks excessive, they say. "We expect a pushback from BOE Governor Andrew Bailey, which if realized, should pose a headwind to sterling alongside political developments." Greater fiscal premium should be attached to new Prime Minister Andy Burnham despite its pledges of fiscal discipline, they say. The euro falls 0.1% to 0.8547 pounds after reaching a three-week high of 0.8559 Monday, according to LSEG. Sterling rises 0.1% to $1.3299 after hitting a near four-week low of $1.3278 overnight. ([email protected])0854 GMT - Investors lower their expectations of the Bank of England raising interest rates in the coming months as oil prices retreat. The price of Brent crude oil falls 3.6% to $85.17 as negotiations aimed at resolving the Middle East conflict resume, easing market concerns about high energy prices pushing up inflation. Markets currently price in a total of 35 basis points of BOE rate increases in 2026, 12 basis points down from last week's pricing, LSEG data show. ([email protected])0845 GMT - The euro is failing to find much support from the pullback in oil prices as markets position for the possibility of the Federal Reserve raising interest rates on Wednesday, ING's Chris Turner says in a note. Opinions in favor of lifting rates cite the benefits of an early move to boost the Fed's inflation-fighting credentials and lessen the need for subsequent tightening, he says. "The Fed's lack of communication has certainly created fertile ground for such speculation." The market prices a 34% chance of a rate rise Wednesday, LSEG data show. The euro trades steady at $1.1370 after reaching a one-month low of $1.1360 earlier. ING sees scope it to drop to $1.1325 if it breaks below $1.1360. ([email protected])