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Cryptocurrency News Articles
Bitcoin, Ether Nurse Losses as Dollar Strengthens Ahead of U.S. Inflation Report
Oct 10, 2024 at 05:24 pm
A hotter-than-expected inflation report would weaken the case for Fed interest-rate cuts.
Bitcoin (BTC) and Ether (ETH) nursed losses on Friday as a hawkish rethink of the odds of outsized Federal Reserve interest-rate cuts kept the U.S. dollar bid ahead of a pivotal inflation report.
The crypto market was listless during the European morning as a stronger dollar capped gains. Bitcoin was trading near $61,000, slightly higher than the overnight low of $60,400 but still down more than 1.5% over 24 hours. Ether saw similar price action, trading 1.9% lower at $2,395.
Other major alternative cryptocurrencies, BNB and SOL, traded 1% lower, with XRP down 0.6%, according to CoinDesk data.
The dollar index (DXY), which gauges the greenback's exchange rate against major fiat currencies, rose to 102.97, the highest since Aug. 16, taking the cumulative gain since the Sept. 30 low of 100.18 to 2.7%, according to data source TradingView.
The CME's FedWatch tool showed traders assigning an 85% probability to the Fed cutting interest rates by 25 basis points at its Nov. 7 meeting instead of 65% a week ago.
Back then, markets saw a 35% chance of the Fed delivering another 50 basis-point cut by year-end, having made the first in September. Friday's blowout nonfarm jobs report revived the "U.S. exceptionalism" story, forcing traders to reassess expectations for faster and bigger rate reductions.
The minutes from the September Fed meeting, released Wednesday, showed policymakers were divided on how aggressive the central bank should be. “A substantial majority of participants” favored cutting by half a percentage point, though some expressed misgivings about going that large, the minutes said.
The U.S. inflation report, due at 12:30 pm ET, could breed market volatility if it deviates from expectations. The data is expected to show the consumer price index (CPI) rose 0.1% month-on-month and 2.3% year-on-year in September, following August's 0.2% month-on-month and 2.5% year-on-year. The core CPI, which excludes food and energy prices, is forecast to print at 0.2% month-on-month and 3.2% year-on-year, according to FXStreet.
Hotter-than-expected CPI prints could strengthen calls to stop rate cuts, potentially adding to DXY's upward momentum and leading to risk aversion.
ING, however, said early this week that the CPI won't lead to material changes in the market positioning, given the Fed’s focus has shifted to the labor market.
“Markets have fully priced in a 25 basis point cut by the Fed next month and the pivot in the narrative toward the labor market has left the market largely uninterested in CPI prints,” ING analysts wrote in a note.
“The market will likely ignore a CPI print that is within 1 standard deviation of expectations (i.e., between 1.7% and 2.9% y/y for headline CPI). Only prints outside this range will lead to meaningful market moves.”
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