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

0951 ET - The Swiss franc could extend its recent gains against the dollar after the U.S. Treasury's decision to boost buybacks of long-term securities, Morgan Stanley analysts say in a note. "The franc should benefit from renewed focus on U.S. policies perceived as leaning against dollar strength." This year the franc has consistently rallied when weak dollar policy concerns have intensified, they say. The Treasury's larger buybacks could revive such concerns, weakening the dollar against the franc even if yield differentials are stable. With foreign exchange volatility expected to remain subdued, the franc's appreciation should be gradual, they say. The dollar rises 0.1% to 0.8020 francs after reaching a two-month low of 0.7947 Thursday, LSEG data show. (renae.dyer@wsj.com)

0946 ET - The Japanese yen has ample room to weaken against the dollar unless the U.S. fundamental backdrop changes materially, Morgan Stanley analysts say in a note. Ongoing Middle East tensions and the resulting rise in energy prices should keep expectations for the Federal Reserve's final--or terminal--interest rate elevated while also worsening Japan's terms of trade, they say. "Our dollar-yen fair-value model--based on U.S. terminal-rate pricing, global risk sentiment, and Japan's terms of trade--still points to around 167.00." The dollar rises 0.1% to 159.10 yen, having reached a 40-year high of 163.98 last month, LSEG data show. (renae.dyer@wsj.com)

0939 ET - The Bank of Canada is likely to be on hold through the rest of 2026 and the first half of 2027 as it assesses the impact from the escalation of trade tensions between Ottawa and Washington, says BofA Securities economist Carlos Capistran. The hit to the Canada GDP might end up being modest, but Capistran says he anticipates sizable damage to business confidence. "Renewed uncertainty is likely to weigh on investment, and potentially hiring, more than the tariffs themselves," Capistran says. Canada's economy had exhibited encouraging signs of life, but America's new 50% tariff, Ottawa's intention to retaliate and elevated uncertainty "are likely to cap the upturn and keep the BOC cautious." (paul.vieira@wsj.com; @paulvieira)

0930 ET - The euro could settle into its current range against the dollar after recent gains, Societe Generale's Kit Juckes says in a note. U.S. growth expectations for 2026 have been revised slightly lower to 2.1% while eurozone forecasts have been revised a tad higher to 0.8%, he says. The two-year U.S.-eurozone rate differential is tracking growth expectations and the euro-dollar exchange rate is following, he says. The euro could struggle to extend its recent gains against the dollar unless U.S. growth expectations deteriorate further or there is a another positive catalyst, he says. The euro falls 0.1% to $1.1667 after hitting a three-month high of $1.1711 Friday, according to LSEG. (renae.dyer@wsj.com)

0926 ET - Investors should avoid worst-case scenarios about the Canadian economy in the aftermath of failed U.S.-Canada trade talks and threats of a renewed trade war, says Derek Holt, economist at Bank of Nova Scotia. "Resist the temptation to go to the darkest place," he tells clients in an analysis about the state of U.S.-Canada trade. He says the 50% tariff would represent a "micro shock" to the broader economy, as it targets 5% of total Canadian exports to U.S. Canada's decision to delay implementation of retaliatory tariffs until after Labor Day leaves open the possibility of renewed talks toward a resolution. Holt adds initial CAD weakness and lower bond yields will provide some support to Canadian exporters, alongside an expected dose of federal stimulus. (paul.vieira@wsj.com; @paulvieira)

0901 ET - The U.K.'s economic resilience in the face of the Iran war has prompted speculators to trim bets on a weaker sterling, Rabobank's Jane Foley says in a note. The latest CFTC data show sterling net short positions, which expect the currency to fall, declined in the week to August 18 and are now roughly half the size of June levels. However, the U.K. budget in October could serve as a reminder of the fiscal spending constraints on new U.K. Prime Minister Andy Burnham, she says. "Anything other than fiscal prudence could worry both gilts [U.K. government bonds] and the pound." Sterling trades steady against the dollar and euro at $1.3637 and 0.8554 per euro respectively. (renae.dyer@wsj.com)

0843 ET - Treasury yields slip to start a week that features GDP update, PCE inflation and Fed Chairman Warsh's first Jackson Hole speech. The decline on long-end yields intensifies after CNBC reports, citing anonymous sources, that the Treasury could use its $1 trillion General Account to fund the planned increase in buyback operations. Economists surveyed by WSJ expect the second revision of 2Q GDP to remain at 1.5% annualized rate. PCE inflation is forecast to stay well above the Fed's 2% target. The 30-year yield is at 5.239%, down from Friday's settle of 5.276%. The 10-year drops to 4.708% from 4.737%, while the two-year ticks higher to 4.238% from 4.232%. (paulo.trevisani@wsj.com; @ptrevisani)'"The dollar's reaction is likely to depend on the scope and severity of the sanctions," Commerzbank's Volkmar Baur says in a note.' "Dollar Rises Slightly as U.S.-Iran Conflict Continues -- Market Talk," at 0654 GMT, misspelled the analyst's name.

0700 ET - Institutional inflows into bitcoin will be required to extend the cryptocurrency's rally further, IG analyst Chris Beauchamp says in a note. "For the moment it looks like the outflows have been staunched, and the beginnings of an inflow revival are in play." This is key for a sustained bounce so the focus will be on upcoming flow data, he says. Bitcoin's recent gains come after the U.S. Treasury announced increased buybacks of long-term bonds. This prompted markets to sell the dollar and seek alternative assets like cryptocurrencies in so-called dollar debasement, he says. Bitcoin rises 0.5% to $77,804 after reaching a three-month high of $79,455 Friday, LSEG data show. (renae.dyer@wsj.com)

0656 ET - The Canadian dollar's losses could remain contained for now following the collapse in U.S.-Canada trade negotiations, MUFG Bank's Derek Halpenny says in a note. There was always a risk of a breakdown in talks to avoid U.S. tariffs on Canadian goods, so there is unlikely to be a large selloff in the Canadian dollar in the near term, he says. Elevated oil prices also remain supportive. However, the medium term implications of the trade spat for the currency depends on whether the situation intensifies and investors price in greater economic harm for Canada, he says. "Canadian dollar downside risks will intensify the longer there is no resolution to this escalating trade war." The U.S. dollar rises 0.5% to 1.3831 Canadian dollars. (renae.dyer@wsj.com)

0651 ET - Cryptocurrencies could remain supported if U.S. Treasury yields continue to recover from a recent buyback announcement, Block Scholes analyst Thahbib Rahman says in a note. The Treasury last week announced increased buybacks of long-term bonds but this failed to have a lasting impact in lowering yields, he says. Should the impact of the Treasury's efforts to lower yields continue to fade, cryptocurrencies and gold could rise against a weaker dollar in debasement trades. These are where surging government debt causes investors to turn to other assets, he says. Bitcoin rises 0.2% to $77,571 after reaching a three-month high of $79,455 Friday. Ether gains 0.6% to $2,463 after hitting a six-month high of $2,545 Saturday. (renae.dyer@wsj.com)

0634 ET - While defense and investment spending by the German government has ramped up this year, levels remain below target, Sebastian Becker at Deutsche Bank says in a note. Germany's fiscal expansion is clearly gaining momentum, he says. The deficit stands at around 90 billion euros, roughly 50 billion euros higher than a year earlier, while defense spending has increased approximately 30%. However, underspending remains a key risk, Becker says. "Disbursements have been sluggish relative to the ambitious spending targets. While [year-to-date] spending levels are well above last year's figures, as of July less than half of the full-year spending targets have been reached," he says. Still, a large shortfall is unlikely, as spending tends to pick up toward year-end, he notes.