Bitcoin's Outlook Depends on Fed Policy Guidance — Market Talk

0810 GMT - Bitcoin's near-term trajectory will largely depend on the Fed's policy guidance and U.S. bond yield movements, says Linh Tran, market analyst at XS.com, in commentary. Bitcoin could regain upward momentum if 10-year TIPS yields ease and the dollar weakens, Tran writes. Fed Chair Powell's upcoming speech at the Jackson Hole symposium is also a pivotal event. A more dovish tone recognizing slower growth risks may offer short-term support for bitcoin, Tran says. However, a hawkish stance to contain inflation may trigger a sharper correction in bitcoin and other risk assets, Tran adds. Bitcoin is last 0.5% lower at $113,852, LSEG data shows. (amanda.lee@wsj.com)

0804 GMT - Better-than-expected U.K. public finances data for July are likely to offer some relief to Treasury chief Rachel Reeves, Investec Economics' Ellie Henderson says in a note. Public sector net borrowing stood at 1.1 billion pounds in July, down from 3.4 billion pounds a year ago and below the 3.2 billion pounds consensus forecast by economists in a WSJ survey. Public borrowing in the four months to July stood at 60.0 billion pounds, close to the 59.9 billion pounds forecast by the Office for Budget Responsibility. Reeves "will likely be relieved that the monthly net borrowing data has largely evolved as expected", Henderson says. (miriam.mukuru@wsj.com)

0741 GMT - The euro rises, turning marginally positive on the day, after a key measure of German services and manufacturing activity rose by more than expected in August. The composite purchasing managers' index rose to 50.9 in August from 50.6 in July. Economists in a WSJ survey expected a reading of 50.3. A level above 50 signals an expansion in business activity. The data follow better-than-expected French PMI data earlier. The euro rises to $1.1656 after the German survey from $1.1643 beforehand. (renae.dyer@wsj.com)

0733 GMT - Yields on French government bonds, or OATs, rise after improvement in French purchasing managers' indices data. The 10-year OAT yield jumps 2.3 basis points to 3.437% after the data, having traded at 3.414% beforehand, according to Tradeweb data. The flash estimate composite PMI was 49.8 in August, up from 48.6 in July and beating analysts' forecasts of 48.3 in the Wall Street Journal's poll. The French data also prompted a rise in peer eurozone bond yields. (emese.bartha@wsj.com)

0731 GMT - The euro trims its losses against the dollar slightly after the French purchasing managers' index survey exceeded expectations. The composite PMI rose to a 12-month high of 49.8 in August from 48.6 in July, above the 48.3 expected by economists in a WSJ survey. A reading below 50 signals a contraction in business activity, however. This "reinforces the persistent trend of economic weakness that has defined the year so far," Hamburg Commercial Bank economist Jonas Feldhusen says in the survey's press release. The euro rises to $1.1641 after the data, from $1.1634 beforehand. (renae.dyer@wsj.com)

0730 GMT - Yields on U.K. government bonds edge higher after U.K. public finances data showed an overall rise in government borrowing in the four months to July. Public sector net borrowing for July was 1.1 billion pounds, better than the 3.2 billion pounds consensus forecast by economists in a WSJ poll. The public borrowing in June, however, was revised up to 22.6 billion pounds from 20.7 billion pounds, raising concerns about rising government debt. "The big picture remains that the public finances are in chronically weak condition," Pantheon Macroeconomics Elliott Jordan-Doak says in a note. The 10-year gilt yield climbs 2.6 basis points to last trade at 4.700%, Tradeweb data show. (miriam.mukuru@wsj.com)

0723 GMT - The Bank of England still has room to reduce interest rates as the U.K. braces for a fiscal squeeze, RSM U.K. economist Thomas Pugh writes in a note. Public borrowing came in less than expected in July, and at 1.1 billion pounds the lowest level for that month in three years, figures show Thursday. That's good news for Treasury chief Rachel Reeves, who is struggling to fund the government's spending plans without borrowing more than her fiscal rules allow. Reeves will probably still have to raise taxes later this year to the tune of around 20 billion pounds, Pugh estimates. However, the BOE has room to maneuver in order to offset the impact of fiscal consolidation, he says. (joshua.kirby@wsj.com; @joshualeokirby)

0709 GMT - Bitcoin falls after the Federal Reserve's latest meeting minutes dampened interest-rate cut expectations. The minutes showed most policymakers were more concerned about the risk of higher inflation than a slowdown in the labor market. The worse-than-expected July nonfarm payrolls report released after the meeting likely disrupted these assessments, Barclays analysts say in a note. However, the minutes suggest the "bar for the majority to shift focus to full employment risks in September may be higher than markets seem to think." Barclays expects the Fed to deliver one 25 basis-point rate cut this year in December. The market prices in a 79% chance of a September cut, LSEG data show. Bitcoin falls 0.6% to $113,682, according to LSEG. (renae.dyer@wsj.com)

0654 GMT - The euro could fall as upcoming European purchasing managers' index surveys could be weaker than anticipated, Commerzbank's Michael Pfister says in a note. Much hope is pinned on the PMIs to show positive growth prospects as the data have outperformed other leading economic indicators in recent months, he says. The PMIs could disappoint, however, converging with other indicators that point to a slower recovery, he says. "Given the attention that PMIs usually receive, this is likely to negatively impact the euro." The euro falls 0.2% to $1.1631. The French, German and wider eurozone PMIs are due at 0715 GMT, 0730 GMT and 0800 GMT, respectively. (renae.dyer@wsj.com)

0636 GMT - The dollar rises slightly after the minutes of the Federal Reserve's July meeting signalled policymakers were more concerned about high inflation than a slowing labor market. A "majority of participants judged the upside risks to inflation as the greater of these two risks," the minutes said. The meeting came before the release of the worse-than-expected July nonfarm payrolls report. That means the Fed minutes were "somewhat outdated" and the market reaction was muted, Danske Bank analysts say in a note. Attention now turns to Fed Chair Jerome Powell's speech at the Jackson Hole symposium on Friday. The DXY dollar index rises 0.2% to 98.365.(renae.dyer@wsj.com)

0636 GMT - The Taiwan dollar continues to lose ground versus the greenback, depreciating 0.5% to its weakest levels since May. OCBC strategists think that foreign outflows from the equity market could be one of the factors behind the Taiwan dollar's recent subpar performance. They also point out market chatter around a discussion at the economic committee of Taiwan's legislature about hopes of stabilizing the exchange rate. However, the central bank later said that the exchange rate is influenced by international factors and that it doesn't pursue a specific exchange rate. Ultimately, it's the USD's direction after Fed Chair Powell's speech Friday that will have a bigger influence over USD/TWD, say OCBC's Frances Cheung and Christopher Wong. USD/TWD last up 0.6% at 30.447 after touching 30.511 earlier. (fabiana.negrinochoa@wsj.com)

0622 GMT - India's central bank will likely cut its benchmark interest rate one more time in October this year by 25bps, Barclays economists write in a note. Lower inflation and the tariff overhang have kept the door open to another rate cut, they say. The Reserve Bank of India was prudent in pausing the easing cycle this month amid heightened uncertainty. Development of trade risks will determine policy space and guide RBI's path in the coming meetings, they add. Tariffs will likely settle lower than 50%, but India is preparing for a 50% scenario, they say, noting the incremental thawing of India-China relations and a focus on spurring domestic demand. Should the 50% tariff rate kick in, the drag on growth would be higher than Barclays estimated earlier, they add. (kimberley.kao@wsj.com)