Dollar Eases Along With Treasury Yields, Oil Prices — Market Talk
1010 GMT - The dollar eases as Treasury yields fall and the global bond selloff loses momentum, BankPro's Paolo Broccardo says in a note. Lower oil prices also weigh, moderating the inflation impulse that has supported Federal Reserve tightening expectations. The dollar could remain under mild pressure until Wednesday's inflation data provides clearer direction, he says. A firmer reading could boost near-term Fed tightening expectations, lifting yields and the dollar. A softer print could challenge the December rate-rise currently priced, lowering yields and the dollar, he says. The DXY dollar index falls 0.3% to 102.302 after reaching an 18-month high of 102.607 Monday. Ten-year Treasury yields fall 5.2 basis points to 5.192%, according to Tradeweb. ([email protected])1004 GMT - A hypothetical run on a global stablecoin could potentially spill over to the traditional financial system as the sectors become increasingly dependent on each other, an international body monitoring financial stability says. Stablecoins are digital tokens pegged to the U.S. dollar or other currencies. Damage could spread via reserve-asset fire sales and banking deposit withdrawals to fund redemptions, as well as in foreign exchange markets where they are used for cross-border transactions, the Financial Stability Board wrote in an Oct. 12 report. "In stress, round-the-clock access to and the speed of trading on secondary markets may increase the potential speed and magnitude of sell offs, putting pressure on the stablecoin's peg if redemptions cannot keep up with demand," the FSB says. ([email protected])0943 GMT - Bitcoin rises marginally as Treasury yields ease but the cryptocurrency is struggling to build momentum, IG analyst Chris Beauchamp says in a note. Bitcoin gains remain limited after a sharp retreat from the seven-month high of $87,315 reached on Sept. 21, according to LSEG. "The price has fallen through and then re-entered the $82,814-$82,035 support area, and buyers have yet to show real conviction," Beauchamp says. The pressure partly reflects the prospect of the Federal Reserve raising interest rates further. The recent easing in Treasury yields takes the edge off the opportunity cost of holding a non-yielding asset like bitcoin, he says. However, crypto exchange-traded fund flows have turned negative. Bitcoin rises 0.5% to $83,419, LSEG data show.([email protected])0938 GMT - The IMF's upgrade of U.K. growth forecasts offered a boost to Chancellor John Healy ahead of the Autumn Budget, but the economy isn't out of the woods just yet, Joe Nellis at MHA says. The IMF upgraded growth forecasts to 1.3% in 2026 from 1.0%, with corporate investment in AI and infrastructure supporting the outlook. But the government must avoid undermining this improvement, Nellis says. "Investment must be turned into tangible productivity gains if the U.K. is to cure the long-term malaise in the economy and generate sustainable growth." The IMF also expects government borrowing to fall to 1.4% of GDP by 2031. However, persistent energy costs, inflation above target and high borrowing costs pose risks to growth and public finances, Nellis says. ([email protected])0928 GMT - The U.S. CPI print on Wednesday is expected to show that inflation accelerated in September, mainly driven by higher fuel prices and energy prices, though there are more indications that the underlying inflation trend remains moderate, Julius Baer Chief Economist David Kohl writes in a note. Cooling labor-market conditions and anchored inflation expectations support the view that second-round effects remain limited, he adds. Kohl says the Federal Reserve is likely to keep rates unchanged in October and to deliver a rate hike in December. ([email protected]; @ivy_jiahuihuang)0923 GMT - Bitcoin and ether recover as declines overnight quickly attracted buyers, LMAX Group's Joel Kruger says in a note. Despite a challenging macroeconomic backdrop, the crypto market "continues to absorb selling pressure without allowing weakness to gain momentum." Crypto's ability to withstand setbacks suggest underlying demand is becoming more durable, he says. Middle East tensions and energy supply risks persist but easing Treasury yields and a softer dollar reduce pressure on digital assets, he says. Regulatory progress also continues with the Securities and Exchange Commission's proposed crypto custody reforms and the Commodity Futures Trading Commission's proposed framework for certain crypto trading venues. Bitcoin rises 1.0% to $83,860 and ether gains 0.6% to $2,531, LSEG data show. ([email protected])0914 GMT - Qatar and Kuwait are expected to record the steepest economic contractions among Gulf states this year as disruptions to the Strait of Hormuz constrain hydrocarbon exports, Citi Research says. Qatar's economy is forecast to shrink 13.5%, with hydrocarbon output falling 38.8%, while Kuwait's GDP is projected to decline 12.2% as oil activity contracts 27.7%. Neither country has an alternative overland route for crude exports, leaving them particularly exposed to shipping restrictions. Citi also expects Qatar's fiscal deficit to widen to 8.0% of GDP and Kuwait's to 22.1%, highlighting the pressure on government finances from reduced hydrocarbon production. ([email protected])0913 GMT - A range of indicators suggest the dollar's rally is becoming stretched but this isn't enough to call for a reversal, ING's Francesco Pesole says in a note. "Our short-term valuation model shows the dollar overvalued against every G-10 currency except sterling, where it's at fair value." However, a clear macroeconomic or market catalyst is needed for a reversal of the dollar's strength, he says. Federal Reserve interest-rate rise expectations remain stickier than those for most other central banks, limiting the dollar's scope to fall even if oil prices retreat, he says. Weakness across global bonds also support demand for a liquid defensive currency. The DXY dollar index falls 0.3% to 102.269 after hitting an 18-month high of 102.607 Monday.([email protected])0909 GMT - The risk of further interventions to support the Japanese yen curtails the currency's scope to fall against a strengthening dollar, MUFG Bank's Lee Hardman says in a note. Japan's Prime Minister Sanae Takaichi reiterated that U.S. and Japanese finance ministers remain in close contact on foreign exchange. The yen has remained at stronger levels since the joint U.S.-Japan intervention in late July. The yen is also supported by building expectations for a faster pace of Bank of Japan interest-rate rises, Hardman says. "In the current environment of broad-based dollar strength, we expect the yen to continue to perform better against non-dollar crosses." The dollar falls 0.4% to 157.93 yen after reaching a two-and-a-half-week high of 158.75 Monday, LSEG data show.([email protected])0818 GMT - The household support measures presented in Malaysia's 2027 budget is expected to add an initial 0.4 ppts to GDP growth, Ram Ratings says in a note. The measures are in particular expected to help sustain consumption amid external uncertainty, as the government forecasts growth of 4.2%-5.2% next year. The measures include higher minimum wages, income tax relief and larger cash aid. Although the budget includes few significant measures to broaden revenue sources, the targeted fiscal deficit of 3.3% of GDP reflects the government's continued commitment to fiscal consolidation, it says. ([email protected])0816 GMT - The euro is about 1.5% undervalued versus the dollar relative to short-term fundamentals following recent losses due to French debt concerns, ING's Francesco Pesole says in a note. "This suggests a moderate build-up in France-related risk may be becoming entrenched in the euro, but also that the risk premium could expand further if French bonds continue to lose value." However, expectations that this year's French budget can be passed via decree might help contain the spread between 10-year German and French government bond yields, he says. The euro rises 0.3% to $1.1187 after reaching a 17-month low of $1.1151 Monday, LSEG data. ING sees a risk of it falling below $1.11, although expects some stabilization Tuesday. ([email protected])0812 GMT - BMI raised its average copper price forecast for this year to $13,500 a metric ton from $12,700 a ton, citing tariff-related market disruptions and persistent supply constraints. "For the remainder of 2026, we expect copper prices to remain volatile and highly sensitive to tariff-policy developments, with the eventual Washington decision likely to set the near-term market direction, while broadly intact structural tightness should temper the extent of any correction," analysts at the firm say. Over the longer term, copper prices are expected to be supported by a persistent supply deficit and rising demand as the energy transition gathers pace. BMI forecasts copper prices reaching $17,000 a ton by 2035, driven by electrification and investment in clean-energy infrastructure. In early trading, three-month copper futures on the LME are flat at $14,624.50 a ton. ([email protected])