Global Forex and Fixed Income Roundup: Market Talk

The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0939 GMT - The cost of default protection for euro-denominated credit stays steady as markets await the minutes of the U.S. Federal Reserve meeting due to be published at 1800 GMT. The minutes could provide clues on the Fed members' views on the interest-rate outlook and on what the central bank might decide at the next policy meeting in September. The iTraxx Europe Crossover index of euro high-yield credit default swaps is unchanged at 253 basis points, S&P Global Market Intelligence data show. (miriam.mukuru@wsj.com)

0939 GMT - U.S. Treasury yields and the dollar ease as investors take a breather after Tuesday's bond selloff and ahead of the Fed's minutes later in the day. "The U.S. dollar retreated on Wednesday toward its previous low as Treasury yields pulled back to some extent," Tapaas' Jonathan Squires says in a note. However, the dollar could remain under pressure as monetary-policy expectations have softened, he says. Markets currently assign a 67% probability for unchanged policy rates at the Federal Reserve's September meeting, according to LSEG. Longer-dated Treasury yields meanwhile remain near multiyear highs as fiscal spending remains a concern. The DXY dollar index falls 0.2% to 99.452. The 10-year Treasury yield eases 0.8 basis points to 4.697%, according to Tradeweb. (emese.bartha@wsj.com)

0936 GMT - Pay growth and the wage outlook in the eurozone have so far remained moderate after the outbreak of this year's energy shock, with no clear signs of second-round effects, Bank of Finland Gov. Olli Rehn says. "Keeping inflation expectations anchored will be essential to ensure this remains the case," he said in a speech in Helsinki. The European Central Bank, of which Rehn is member of its governing council, last month kept its key interest rates on hold after raising it in June. "Designing the appropriate policy response to this supply shock is at the core of our work on the ECB Governing Council. We next meet in September to reassess the situation and outlook," Rehn said. (edward.frankl@wsj.com)

0931 GMT - Sterling could show a limited reaction even if the Bank of England raises interest rates this year, MUFG Bank's Derek Halpenny says in a note. U.K. jobs and inflation data, released Tuesday and Wednesday respectively, are unlikely to alter the BOE's thinking, with the focus on the Middle East conflict, he says. "If there is no resolution to getting the Strait of Hormuz reopened and energy prices rise further from here and stay elevated then the BOE may well have to hike by year-end." However, a rate rise is priced by year-end so sterling's reaction should be modest, he says. Sterling rises 0.2% to $1.3554 versus a weaker dollar. The euro trades flat at 0.8558 pounds. (renae.dyer@wsj.com)

0922 GMT - Inflation is likely to rise further in the U.K., Sanjay Raja at Deutsche Bank says in a note. Inflation jumped to 2.9% in July, from 2.6% a month prior. "The [Bank of England]'s suite of core services measures all ticked up--highlighting some uneasiness in price momentum," he says, adding that energy inflation also remains volatile due to lingering uncertainty in the Middle East. On the bright side, food price inflation fell to its lowest rate since late 2021, while services price growth also hit its lowest rate in three months, Raja says. Still, this may be only a temporary reprieve. "There's good reason to think that food prices are likely to move one way in 2027: up," he says. (don.forbes@wsj.com)

0910 GMT - The euro's rise against the dollar is likely to remain contained amid elevated European natural gas prices and ahead of the Federal Reserve's meeting minutes at 1800 GMT, ING's Chris Turner says in a note. Rising natural gas prices are "bad news for Europe and leaves manufacturers at a comparative disadvantage relative to the U.S.," he says. However, high energy prices maintain the restrictive policy stance of the European Central Bank where chief economist Philip Lane warned Tuesday of eurozone inflation staying at 3.0% all year, he says. The euro rises 0.2% to $1.1599. "Event risk from the FOMC minutes and higher natural gas prices warn against chasing the euro above $1.1600-$1.1620 today," Turner says. (renae.dyer@wsj.com)

0905 GMT - Bank Indonesia's current pause looks like a tactical one rather than the end of its tightening cycle, with one final 25bp rate hike to 6.00% expected in 4Q, RHB economist Wong Xian Yong says in a note. The expected increase has been pushed back from 3Q as the rupiah stabilizes, inflation eases and external tightening pressures moderate, he says. However, BI is expected to remain focused on rupiah stability, inflation and economic growth, he reckons. Renewed rupiah weakness and higher food prices because of El Nino could bring forward the rate increase, while softer growth and stable inflation could allow BI to stay on hold longer, he adds. (yingxian.wong@wsj.com)

0859 GMT - U.K. food and beverage inflation at 1.3% was last lower nearly five years ago, putting pressure on retailers, says Bogdan Toma, head of U.K. consumer practice at McKinsey & Co. "This low level of price increases is not sustainable in a retail sector running on low single-digit margins," he says. Retailers are coping with soft consumer spending power, flattening prices, alongside constantly surging costs. They are absorbing many of these costs, leading to profit margins declining, though is building tension that will need to get resolved, Toma says. With many of the U.K.'s agricultural output hit by hot weather and supply-chain challenges, there could be increased price pressures on food prices into the fall, he adds.(edward.frankl@wsj.com)

0849 GMT - Malaysia is emerging as one of the biggest beneficiaries of the global AI boom, with data-center investment and information-service exports expected to support growth in the years ahead, Capital Economics' Gareth Leather writes. Data-center investment likely contributed about 1% of 2025's GDP, while ICT-services exports rose 40% last year, he notes. Industry estimates suggest data-center capacity could increase fourfold by 2030, supporting growth as more facilities become operational, he says. Water and power constraints could slow the expansion pace, but infrastructure upgrades should help ease bottlenecks. CE raises Malaysia's 2026 and 2027 growth forecasts to 6.0% and 5.5%, respectively, from 5.5% and 4.2%. It says the main risk would be a downturn in global AI investment, which could weaken data-center spending and electronics exports. (yingxian.wong@wsj.com)

0843 GMT - U.K. inflation data for July showed a slowdown in underlying inflation, while headline inflation increased due to higher energy prices, Berenberg's Andrew Wishart says in a note. Annual headline inflation rose to 2.9% in July, from 2.6% in June, in line with the consensus forecast by economists in a WSJ poll. Nonetheless, annual services inflation decelerated to 3.4%, from 3.6% in June, he says. This slowdown in underlying inflation is likely to allow the Bank of England to keep interest rates unchanged at 3.75% in the coming months, Wishart says. (miriam.mukuru@wsj.com)

0808 GMT - OCBC expects average economic growth in some Southeast Asian economies to slow this year before picking up in 2027. Its economists note that 2Q GDP growth strengthened in Vietnam and Malaysia on quarter, while growth in Indonesia, the Philippines and Thailand moderated further. These economies still face headwinds due to factors such as lingering geopolitical tensions, including limited progress made in the resolution of the U.S.-Iran conflict. OCBC expects these economies to expand on average by 4.9% in 2026 before picking up to 5.0% in 2027. These economies had averaged economic growth of 5.1% in 2025.(amanda.lee@wsj.com)

0804 GMT - The Canadian dollar rises modestly after President Trump said he would pause a 50% tariff on certain goods from Canada for three days while the two countries try to finalize a deal. The Canadian dollar has reacted with some relief but the move is fairly muted as markets participants are presumably uncertain whether a deal will go ahead and what form it would take, Commerzbank's Michael Pfister says in a note. Even if an agreement is reached, the focus will be on how robust it is, he says. "For the Canadian dollar to recover more strongly, the new agreement must not be called into question again after just a few weeks." The U.S. dollar falls 0.2% to 1.3874 Canadian dollars. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

August 19, 2026 05:39 ET (09:39 GMT)