Higher Energy Prices Could Continue to Weigh on Low-Yielding Yen, Franc — Market Talk

0759 GMT - The low-yielding Japanese yen and Swiss franc could stay under pressure as higher energy prices prompt markets to price in interest-rate rises for other central banks, ING's Chris Turner says in a note. The fact that equities are relatively firm despite higher energy prices could be weighing on the yen and franc as defensive currencies, he says. However, a far more important factor "appears to be low interest rates and central banks that will be slow to hike." The dollar falls 0.2% to 162.90 yen after reaching a 40-year high of 163.23 Tuesday, LSEG data show. The dollar falls 0.1% to 0.8118 francs but stays near a one-week high of 0.8133 reached overnight. ([email protected])0732 GMT - Yields on U.K. government bonds rise as soaring oil prices raise the prospects of high inflation and the possibility of the Bank of England increasing interest rates later this year. U.K. annual inflation for June decelerated to 2.6% from 2.8% in May due to a brief drop in oil prices in June following the U.S.-Iran ceasefire deal. Oil prices have resumed rising after the Middle East conflict resurfaced, with Brent crude rising 2.4% on Wednesday to $93.3 a barrel. Ten-year gilt yields climb 1.3 basis points to last trade at 5.041%, Tradeweb data show. ([email protected])0723 GMT - A surge in fundraising by Chinese artificial-intelligence companies reflects both genuine capital needs and a favorable but potentially temporary market window, says Charu Chanana, chief investment strategist at Saxo Markets. "Chinese AI companies are capitalizing on strong investor appetite before the market becomes more selective," Chanana says, pointing out that companies across the AI value chain have already raised more than US$10 billion in Hong Kong in the first half of 2026. She adds that there is "sufficient liquidity for the strongest offerings, but probably not enough to support every company at every proposed valuation." ([email protected])0723 GMT - Bitcoin falls modestly as investors take profits after the cryptocurrency reached a five-week high in the previous session. Tuesday's gains were driven by renewed institutional demand, regulatory optimism and investors being forced to close earlier bets against bitcoin as the cryptocurrency strengthened, Zaye Capital Markets analyst Naeem Aslam says in a note. However, the escalating U.S.-Iran conflict create uncertainty for bitcoin prices, he says. "Bitcoin may benefit from demand for assets operating outside conventional financial channels, but during sudden geopolitical shocks it often behaves like a high-risk technology investment, leaving it vulnerable to rapid selling when investors reduce exposure." Bitcoin falls 0.8% to $65,870 after reaching a high of $66,919 Tuesday, LSEG data show.([email protected])0716 GMT - June's fall in annual U.K. inflation to 2.6% all but rules out an interest-rate increase at next week's Bank of England meeting, RSM UK's Thomas Pugh says. While headline inflation came in below the central bank's forecast, the decline was largely driven by lower food, fuel and energy inflation. More importantly for policymakers, services inflation--a key gauge of domestic price pressures--matched expectations. Pugh expects inflation to rebound to around 3.3% in the fall as higher energy costs, supply-chain pressures and increased food prices feed through, with a risk of a higher rate if oil prices surge further. He expects rates to remain unchanged and sees no cuts before 2027. ([email protected])0710 GMT - The Bank of England is expected to leave interest rates unchanged at 3.75% as it awaits clear signs of the impact of the Middle East conflict, Quilter Cheviot's Richard Carter says in a note. The latest U.K. inflation data shows annual headline inflation moderated to 2.6% in June, from 2.8% in May as oil prices briefly dropped in June in the wake of the U.S.-Iran ceasefire. "With events in the Middle East still threatening to erupt back into a full-scale conflict as we saw earlier this year, this will continue to put pressure on the inflation rate." Markets price in a total of 40 basis points of BOE interest rate rises in 2026, LSEG data show. ([email protected])0704 GMT - The dollar eases but remains close to a one-week high reached overnight as the U.S.-Iran conflict pushes up oil prices. The rise in oil prices along with natural gas and other commodity prices has lifted near-term inflation expectations, Deutsche Bank analysts say in a note. "That backdrop meant investors priced in more Federal Reserve rate hikes, and speculation even returned about a potential rate hike next week." The DXY dollar index falls 0.1% to 101.127 after reaching a high of 101.210 overnight. ([email protected])0654 GMT - Eurozone government bond yields open slightly higher as oil prices increase, while lower-than-expected headline U.K. inflation for June has little immediate impact. Brent is up 2% to $92.85 per barrel as hostilities in the Middle East continue. U.K. headline inflation decelerated to 2.6% in June from 2.8% in May, coming in below analysts' expectations of 2.7% in The Wall Street Journal's poll. The 10-year Bund yield rises 1.6 basis points to 3.180%, according to LSEG data. ([email protected])0652 GMT - Despite a slowdown in June, inflation in the U.K. is set to rise again going forward, says Suren Thiru at The Institute of Chartered Accountants in England and Wales. "June's slowdown is a false dawn as it may have already been reversed this month with higher energy bills, following Ofgem's energy price cap rise, likely to have lifted inflation above 3%." Any second-round inflation effects from higher energy prices will likely be limited by a sluggish economy. But escalating tensions in Iran has put 4% inflation back on the table, Thiru says. Today's data has ended prospects of a rate hike by the Bank of England in June, but high inflation will likely become a more notable economic headache for the government, deepening the cost‑of‑living crisis, he says. ([email protected])0640 GMT - Sterling falls after data showed inflation eased more than expected in June, reducing the prospect of the Bank of England raising interest rates. Inflation fell to an annual rate of 2.6% in June from 2.8% in May, although the core measure held at 2.6%. Economists in a WSJ survey expectedinflation of 2.7% and core inflation of 2.5%. "Household energy bills have yet to fully reflect this summer's energy price shock, and the increase in the Ofgem price cap will push inflation higher again in the months ahead," Aberdeen Investments economist Felix Feather says in a note. Sterling trades flat at $1.3369, compared to $1.3382 before the data. The euro rises 0.1% to 0.8532 pounds, from 0.8523 beforehand. ([email protected])0623 GMT - Singapore's consumer-price index likely rose 2.1% on year in June, according to the median estimate of 10 economists polled by the Wall Street Journal. That is higher than the 1.8% increase in May. Core CPI, which excludes private road transport and accommodation, likely rose 1.7% in June, up from 1.4% in May, according to the 10 polled economists. Inflation gained pace last month on a likely pass-through of higher global energy and food prices to domestic costs, ING economists say in a note. The inflation data are due Thursday.([email protected])0600 GMT - A survey of 9,000 people by the Reserve Bank of Australia has found high inflation is a far bigger concern for Australians than housing affordability, interest rates and wages. Still, there's a dearth of understanding about the connection between the level of interest rate and getting inflation into the bank's 2% to 3% target band, it shows. A large portion of those surveyed incorrectly think rising borrowing costs will increase consumer prices, according to the data. The lack of understanding could blunt the impact of monetary tightening in some circumstance. ([email protected]; Twitter @JamesGlynnWSJ)