Stronger Swiss Franc Could Put SNB in a Bind — Market Talk

1159 GMT - A significant Swiss franc appreciation would put the Swiss National Bank in a difficult position, Societe Generale's Kit Juckes says in a note. A break below 0.90 in the euro versus the franc despite a shift towards using the franc as a funding currency instead of the yen would "surely put the SNB in a bind." The SNB's policy rate is 0% while others are tightening monetary policy. If the SNB fails to stem sharp franc gains, the euro could fall to 0.85 francs, he says. The franc is "absurdly expensive" but the geopolitical backdrop remains favorable for the safe-haven currency. The euro rises 0.1% to 0.9308 after reaching a 10-week low of 0.9258 on Oct. 2, LSEG data show. ([email protected])1146 GMT - The price of bitcoin rose last week despite five consecutive sessions of heavy outflows from exchange-traded funds totaling $679 million, analysts at crypto data platform CoinMarketCap say. Its data found that 0.6% of total assets were liquidated last week, with Fidelity's Bitcoin ETF posting $380.3 million of redemptions. "The price rose 1% regardless because the selling was met by short covering, not by new spot buyers," says Alice Liu, CoinMarketCap research head. "That is a thinner floor than $84,000 looks." Bitcoin is 0.3% lower at $83,304. ([email protected])1143 GMT - The Chinese renminbi's recent appreciation shows policymakers remain comfortable for the currency to strengthen as risks to trade from President Trump's tariffs have eased, MUFG Bank's Lee Hardman says in a note. "Upward momentum for the renminbi has been encouraged by the People's Bank of China setting lower daily fixes for dollar-yuan over the past month even as the dollar index has strengthened by around 4%." Policymakers should continue to allow the renminbi to strengthen gradually to limit the impact on trade relations given the EU's pushback against China's widening trade surplus with Europe, he says. The dollar trades flat at 6.6925 yuan, having reached a 45-month low of 6.6913 earlier, according to LSEG. ([email protected])1132 GMT - Sterling rises to a 16-month high against the euro, extending its recent rally. Concerns about French debt are weighing on the euro while sterling is boosted by markets pricing a 90% chance the Bank of England will raise rates by 25 basis points in November, according to LSEG. However, any rate increase will likely prove to be a one-off insurance hike, Ebury's Enrique Diaz-Alvarez says in a note. The U.K. budget on October 28 remains a "critical risk" for sterling and U.K. government bonds given the renewed focus on fiscal sustainability among bond investors, he says. The euro falls to 0.8443 pounds, its lowest level since June 2025. ([email protected])1129 GMT - The effect of rising sovereign bond yields on European banks' asset holdings has been muted so far, ING's Jesse Norcross says in a note, citing findings from the European Banking Authority. European banks all together hold around 4 trillion euros of sovereign bonds, Norcross says. "[EBA] supervisors remain comfortable with current risk levels, with earnings softening the blow of potential valuation effects," he says. Nonetheless, rising geopolitical tensions and challenging macroeconomic conditions warrant monitoring of sovereign bond holdings, he says. ([email protected])1116 GMT - The rebound in oil prices above $100 a barrel is weighing on Germany's economic prospects, Alexander Valentin at Oxford Economics says in a note. "Our view of higher energy prices next year have prompted us to raise our 2027 inflation forecast by 0.5 percentage points to 2.8%, deepening the squeeze on real incomes," he says. As a result, OE also cut its 2027 GDP forecast for the country by 0.2 percentage points to 1.2%. "We now think private consumption will grow by just 0.6% next year, down from our previous projection of 0.9%." In addition, the risk of more rate hikes by the ECB has risen, Valentin says. "We expect the ECB to hold rates this month, although the risk of back-to-back hikes after September's move is not negligible." ([email protected])1102 GMT - The U.A.E. economy barely expanded in the first half of 2026, with financial services providing a key offset to weakness in oil and other sectors, Emirates NBD Research says. Real GDP rose 0.4% on year in the first half, while the economy contracted 2.1% in 2Q. Oil output fell 5.7% and non-oil activity declined 1.1% in the second quarter, with tourism, transport and trade particularly affected by regional disruption. Finance, however, expanded 12.2%, highlighting a sharp divergence between the banking-related sector and the broader economy. ([email protected])1059 GMT — United Arab Emirates banks face growing funding pressure as lending expands faster than deposits amid strong credit demand, analysts at MUFG say. Bank lending rose 18.1% on year in 2Q, compared with deposit growth of around 14%, pushing the sector's loan-to-deposit ratio above 80% from 77.7% in 2025. Infrastructure-related borrowing, foreign-currency deposit outflows and the expiry of central-bank liquidity support measures are tightening funding conditions, the analysts say. Competition for deposits has intensified, with some lenders offering promotional rates above the central bank's 3.9% base rate. MUFG says liquidity remains within regulatory limits, but higher funding costs could squeeze margins and profitability. ([email protected])1047 GMT - Most leverage has left bitcoin and migrated to other cryptocurrencies in the year since the flagship coin's historic price crash, CoinMarketCap analysts say. October 10 marked one year since bitcoin tumbled from $122,000 to $105,000 in minutes as highly leveraged positions collapsed. CoinMarketCap found that open interest in global crypto assets--the amount of derivatives contracts still open--rose 15% this week, while bitcoin's open interest fell 6%. "A year after the 10 October crash, the market owns bitcoin in spot and barely owns it on leverage. The gearing has migrated to altcoins," writes Alice Liu, head of research at CoinMarketCap. Bitcoin is 0.2% lower at $83,450. ([email protected])1039 GMT - The U.K. has enjoyed a year of economic resilience, but momentum will be challenged in the coming months, Thomas Pugh at RSM UK says in a note. The country's economy grew by 1.1% in the first half of 2026, more than the total growth recorded in 2024, Pugh notes. "However, that resilience will be stress-tested this winter as inflation rises above 4%, the Bank of England starts to raise interest rates and we face yet another tax-raising budget," he says. As inflation rises, real wage growth is likely to turn negative next year, dragging spending, while a base-case of two interest-rate rises could also drag demand. Meanwhile the budget, if handled badly, may hit consumer and business sentiment, or push bond yields higher, Pugh says. ([email protected])1034 GMT - The dollar is likely to remain firm for some time as decent U.S. growth and above-target inflation support expectations that the Federal Reserve will raise interest rates further, ING's Chris Turner says in a note. "Barring a big fall in energy prices this week, which seems unlikely, Wednesday's release of September [U.S. consumer price inflation data] looks set to keep those Fed tightening expectations broadly intact," he says. There are upside risks to the consensus forecast of 0.2% month-on-month core inflation, he says. It might take until next spring for tightening expectations to drop out of money markets, he says. The DXY dollar index rises 0.2% to 102.376 and ING expects it to reach 102.850 this week.([email protected])1021 GMT - U.S. long-end Treasury yields could remain supported near multidecade highs amid persistent concerns over the U.S. fiscal outlook, says VT Markets Dubai's ​Mahmoud Mashal in a note. Persistent inflation could lift front-end yields, while a softer reading could push tightening expectations further out and challenge the dollar's recent strength, the senior market strategist says ahead of the September CPI report on Wednesday. "Any renewed rise in oil prices could revive inflation concerns and place upward pressure on Treasury yields," he says. The U.S. Treasury market is closed on Monday due to Columbus Day. Money markets price an 18% probability of a Federal Reserve rate hike later this month, according to LSEG. ([email protected])