A smooth inflation report from the United States later on Wednesday is probable for risk assets, including Bitcoin (BTC). But those who expect fireworks may be disappointed.
The Labor Department will publish the consumer index report (CPI) of January on Wednesday at 13:30 UTC. It is expected to show that the cost of living increased by 0.3% month by month in January, decreasing the increase of 0.4% of December, according to the estimates of reuters tracked by FXSTERET. The annualized figure is expected to coincide with the reading of 2.9% of December.
It is forecast that central inflation, which eliminates the volatile component of food and energy, has increased to 0.3%month to month of 0.2%, resulting in an annualized reading of 3.1%, below the 3.2%of December.
The lowest expected data, particularly the central figure, will probably strengthen expectations for more interest rate cuts in the Federal Reserve (Fed), which could lead to higher yields of the Treasury and a weaker dollar index, than Finally, the demand for more risky assets increases. According to the CME Fedwatch tool, the market currently estimates a 54% chance that the FED reduces interest rates one or not this year.
While a potential adjustment in Fed rates cuts could lift BTC, it is unlikely that it is the only catalyst for a rupture of the ongoing consolidation between $ 90,000 and $ 110,000.
This is due to market metrics with a future vision that indicate greater inflation in the coming months amid commercial war fears, suggesting that the Fed can have a limited window to implement aggressive rate cuts.
Data tracked by Mott Capital Management show that two -year inflation exchanges have risen to almost 2.8%, the highest since the beginning of 2023. The five -year exchange exhibits a similar trend. Higher inflation swaps indicate that the market expects inflation rates .
In other words, the increase in progress in these metrics indicates that the progress in inflation towards the objective of 2% of the Fed has stagnated, and it is likely that price pressures increase in the coming years, probably due to tariffs Trump.
In addition, some investment banks believe that a soft January reading will not see that the Fed moves away from its Awkish Rate Guide. In his testimony of Congress on Tuesday, President Jerome Powell said the Central Bank is in no hurry to reduce rates.
“We do not hope that progress in inflation is sufficient to cause additional interest rate cuts of the Fed this year,” said RBC’s weekly note, added that the January report will show limited flexibility in price pressures.
Blackrock said the inflation of persistent services will prevent Fed from reduce rates.
“We consider the CPI of us for January of this week. Although the December IPC report showed signs of inflation pressures that decrease, salary growth remains above the level that would allow inflation to retreat to the objective of 2% of the Federal Reserve, in our opinion.
Finally, BTC can approach the lower end of its negotiation range of $ 90K- $ 110K in case the printing of the CPI is hotter than expected.
