- BTC, ETH recover from overnight lows, but remain in the red on a 24-hour basis.The rallying dollar might be weighing on the crypto market, according to one analyst.A hotter-than-expected U.S. inflation report would weaken the case for Fed rate cuts.
The dollar index (DXY), which measures the U.S. dollar’s value compared to other significant currencies, increased to 102.97 – its highest point since August 16. Since it hit a low of 100.18 on September 30, this represents an accumulated growth of 2.7%. This information comes from the data provider TradingView.
According to the Federal Reserve’s FedWatch tool, traders are now predicting an 85% likelihood that the Fed will lower interest rates by 0.25 percentage points at its meeting on November 7, compared to a 65% probability a week ago. Previously, markets anticipated a 35% chance that the Fed would implement another 0.5 percentage point cut by the end of the year, following the initial reduction in September.
On Friday, the impressive nonfarm jobs report sparked renewed interest in the idea of America’s unique economic strength, compelling traders to reevaluate their predictions for more substantial and quicker interest rate decreases.
In simple terms, the notes from the Federal Reserve’s meeting in September, published on Wednesday, indicated that there was disagreement among policymakers regarding the bank’s level of action. While a significant number of participants supported reducing interest rates by half a percentage point, some raised concerns about making such a large cut, according to the minutes.
The feeling towards cryptocurrencies has shifted to a ‘fear’ state (with a score of 39), contrasting starkly with the 72 (optimism) observed in equity markets. As explained by Alex Kuptsikevich, a senior market analyst at FxPro, this trend can be attributed to the strengthening US dollar and the growing appeal of bonds, which have diminished institutional interest in Bitcoin.
On Thursday, as per Kuptsikevich, the U.S. inflation report might spark market fluctuations if it strays from predictions.
As a researcher, I am anticipating that the consumer price index data expected at 12:30 UTC will indicate a 0.1% increase in monthly terms and a 2.3% rise in yearly terms for September. This follows August’s figures showing a 0.2% month-on-month and 2.5% year-on-year increase. Regarding the core CPI, which disregards food and energy prices, FXStreet predicts it will show a 0.2% monthly growth and a 3.2% yearly rise for September.
Stronger-than-anticipated Consumer Price Index (CPI) figures might amplify demands for halting interest rate reductions, which in turn could boost the U.S. Dollar Index (DXY) further and potentially encourage caution among investors.
ING stated earlier this week that the Consumer Price Index (CPI) isn’t likely to significantly alter market positions because the Federal Reserve is now primarily concerned with the job market.
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2024-10-10 12:34