Market seem to be all tense ahead of the US CPI announcement today, August 10. This release will shed light on whether the Federal Reserve’s aggressive interest rate hikes are. Whether the US (FED) is effective in containing inflation can affect the size of the next interest rate hikes.
Market before CPI results
The market is showing that investors are cowering before the US CPI results are released. This announcement will prove whether the Fed’s rate hike measures can limit inflation or not. From there, it forms the basis for future interest rate increases.
As of now, speculation is leaning towards inflation rate in the US annual likely to 8.7% in July of 2022 from 9.1% in June, which was the highest reading since November of 1981. Gasoline prices increased nearly 44%. year-on-year in July, much slower than a 60% jump in June and airfares are seen easing while other components including food and rents likely remain elevated.
Core inflation, which strips out more volatile food and energy prices, is expected to accelerate to 6.1% from 5.9%, pausing three months of a slowdown, and confirming high inflation is spreading throughout the economy. Compared to the previous month, the CPI likely rose 0.2%, after a 17-year high rate of 1.3% and the core one is expected to record a smaller increase of 0.5% compared to 0.7%.
As is customary, Bitcoin (BTC), Ethereum (ETH) and most altcoins have retreated as traders reduce their risk before the CPI. BTC price fell 3.71% in 24h to $23,000, while Ether corrected 4.7% to $1.6940.
The rationale that traders are sheltering in stablecoins is sensible, but from a technical analysis point of view, the August 9 pullback is simply a lower support test after the most recent support-resistance flip of the past week, and large-cap assets like ETH and BTC continue to trade within their multi-week ranges.
The CPI is the primary way to measure changes in purchasing trends and inflation.
Actual numbers higher than forecast should be considered positive/uptrend for USD, while actual numbers below forecast should be considered negative/downtrend for USD.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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