Crypto Market Fear Index Turns 'Neutral' — Market Talk

0959 ET - The fear that has dominated cryptocurrency trading is starting to break, according to data from CoinMarketCap. It's Fear and Greed index has risen to a reading of 40-out of-100, a 'neutral' rating up from ratings in 'fear' territory seen since May. While this a hopeful sign for investors, analysts warn that other signs of continued weakness in the market remain. One is that bitcoin dominance of the entire cryptocurrency space remains high at around 60%, according to CoinMarketCap data — with investors unwilling to risk money on more-volatile altcoin options. "This rotation underscores a definitive de-risking phase across the digital asset landscape," says analysts with Bitfinex in a note. Other major cryptocurrencies follow bitcoin higher, with ethereum up 1.2%, XRP up 2.2%, and solana climbing 0.5%. ([email protected])0950 ET - Bitcoin gains 1.7% to $66,443, the highest prices have gotten for the token since June 2. Bitcoin has posted gains for the last three weeks. Today's uptick moves the resistance level for bitcoin up to $68,000, says analysts with Bitfinex in a note. "The market's next direction will likely be decided near the US$68,000 level, where a concentration of breakeven sellers is expected to provide the first major challenge to the rally," says Bitfinex. The firm pegs the short-term holder cost basis of bitcoin around $68,000, meaning that holders that want to exit the coin without stomaching a loss may take the opportunity of a price around that level to do so. ([email protected])0945 ET - Sterling could fall further in coming months if fiscal concerns rise, Rabobank's Jane Foley says in a note. The market is bracing for further policy announcements after the newly formed government under U.K. Prime Minister Andy Burnham announced plans to remove VAT from electricity bills, she says. "This suggests that funding issues will remain at the fore of the market's mind and hints that Burnham's honeymoon may be short-lived." Another headwind facing sterling is that U.K. interest rate rise expectations look overdone, she says. The euro rises 0.4% to 0.8531 pounds and sterling falls 0.4% to $1.3374. Rabobank expects the euro to rise to 0.8650 pounds and sterling to fall to $1.32 within three months.([email protected])0923 ET - Investors in U.K. government bonds, or gilts, are watching for any possible shift in the government commitment to fiscal discipline as new spending plans are announced, Nomura research analysts say in a note. New Prime Minister Andy Burnham pledged to maintain the current fiscal rules but said he would use any "flexibility" within the rules. The government has announced a plan to remove value added tax on energy bills, which would by funded by cancelling the Digital ID scheme. Ten-year gilt yields hit a one-week of 5.044% earlier in the session and last trade at 5.035%, Tradeweb data show. ([email protected])0903 ET - Bitcoin rallies to a five-week high as U.S. stock futures rise, with the tech-heavy Nasdaq leading gains ahead of earnings from major tech companies. Bitcoin is also supported by renewed institutional demand, with spot bitcoin exchange-traded funds recording two consecutive weeks of net inflows, Trade Nation's David Morrison says in a note. Bitcoin rises to a high of $66,602, LSEG data show. The next big upside target is $70,000, while chart support stands at $65,000, Morrison says. ([email protected])0858 ET - U.K. is more vulnerable than other advanced economies to global supply shocks, Matt Swannell at Oxford Economics says in a note. "Although global negative supply shocks push up prices across all economies, the U.K. has often shown a greater tendency to turn these shocks into longer-lasting bouts of above-target inflation," he says. This is due to successive shocks, such as Brexit and the pandemic, as well as strong wage growth, which has made households and businesses more responsive to inflation. Running a persistent current account deficit while relying heavily on overseas investors to finance it also leaves the U.K. exposed to international risk appetite, while a lack of fiscal space means the government is less able to provide support to cushion supply shocks, Swannell says. ([email protected])0831 ET - Polling from Ottawa-based Abacus Data suggest that a majority of Canadians aren't keen on PM Mark Carney making quick concessions to secure a trade detente with Washington. In results published Tuesday, or hours after President Trump threatened to slap a new 50% tariff on a swath of Canadian goods, Abacus says 69% of Canadians want Carney to hold firm in trade talks regarding USMCA, "even if it means living with uncertainty for longer." Abacus adds respondents indicate that reducing Canada's trading dependence on the U.S. should remain a long-term policy priority. The White House says the new 50% tariff is in response to discriminatory Canadian treatment of U.S.-made automobiles, spirits and wine, and dairy products. ([email protected]; @paulvieira)0801 ET - Sterling should perform well as new U.K. Prime Minister Andy Burnham is unlikely to veer from his commitment to the fiscal rules, J.P. Morgan's James Nelligan says in a note. Sterling's attractive yields suggest investors should favor the currency, but instead fiscal concerns have been held it back, he says. J.P. Morgan takes profits on bets for a stronger sterling against the euro, Swiss franc and Swedish krona after recent gains, but its positive view is unchanged. The bank would look to re-enter these positions on any increase in risk premium. John Healey's appointment as treasury chief reduces political uncertainty and could allow sterling to rise towards levels that should be justified by higher yields, Nelligan says. ([email protected])0705 ET - The European Central Bank is likely to hold interest rates at this week's meeting after a hike in June but retain a hawkish tone, Nuveen's Laura Cooper says in a note. The ECB will keep its options open for further tightening should renewed tensions drive energy prices higher, the global investment strategist says. Inflation has been softer than feared and PMI pricing components show little sign of reacceleration, while producer price data confirms that upstream cost pressures are fading, she says. "That makes the case for a pause this month." The complication is renewed disruption to commodity flows, which risks reigniting energy price pressure just as the ECB was gaining confidence in the disinflation path, she says. ([email protected])0700 ET - The outlook for European government bonds remains constructive, Payden Global SIM SpA's Antonella Manganelli says in a note. Although the geopolitical tensions in the Middle East have brought volatility back to energy markets, the rise in oil prices appears contained for now and does not alter the scenario of a gradual normalization of inflation in the euro area, the CEO says. This backdrop continues to favor intermediate maturities particularly--those between five and ten years--which offer the best balance between yield and risk, she says. "One note of caution remains, however: the greater financing needs linked to investment in defence and the energy transition could limit any further decline in yields, especially on longer maturities." ([email protected])0605 ET - Sterling could weaken against the euro given U.K. fiscal risks and the prospect of the Bank of England refraining from raising interest rates, ING's Francesco Pesole says in a note. Euro versus sterling looks cheap according to ING's short-term value metrics, he says. The lack of any fiscal/political risk premium, alongside overly aggressive pricing for BOE rate rises, argues for a higher euro versus sterling, he says. Andy Burnham became the U.K.'s prime minister Monday. The newly formed government plans to remove VAT from electricity bills with further details on cost of living measures expected later. The euro rises 0.1% to 0.8505 pounds, having reached a 13-month low of 0.8453 last Wednesday, LSEG data show. ([email protected])0602 ET - U.S. Treasury yields and the dollar trade steady amid hopes that diplomatic talks between the U.S. and Iran could be revived and a ceasefire put in place, Kudo.com's Konstantinos Chrysikos says in a note. "Progress on that front would limit the demand for safe-haven assets, weighing on the greenback," he says. However, falls in the dollar and Treasury yields could remain limited after Yemen's Iran-aligned Houthi movement declared a naval blockade on Saudi Arabia. Meanwhile, military operations continue in the region and disruptions to maritime traffic persist, Chrysikos says. The 10-year U.S. Treasury yield is steady at 4.598%, according to Tradeweb. The DXY dollar index is stable at 100.926. ([email protected])