An inflation report in the United States later on Wednesday later for risk assets, including Bitcoin (BTC). But those who expect bullish fireworks can be disappointed.
The Labor Department will publish the January report at the consumer price index (ICC) Wednesday at 1:30 p.m. UTC. It should show that the cost of living increased 0.3% per month in January, slowing down the 0.4% increase in December, according to reuters estimated by FXSTREET. The annualized figure should correspond to the reading of 2.9% of December.
Central inflation, which removes the volatile food and energy component, is expected to reach 0.3% of months to 0.2%, resulting in annualized reading of 3.1%, down compared to 3.2% of December.
The data below what planned, in particular the basic figure, will probably strengthen expectations to reduce interest rates of the Federal Reserve (Fed), which could lead to a decrease in yields of the treasury and a dollar index plus weak, finally reinforcing the demand for risky assets. According to the CME Fedwatch tool, the market currently estimates that the Fed reduces interest rates once or not this year.
Although a potential adjustment of the Fed rate cuts can lift the BTC, it is unlikely that it is the only catalyst for an escape from current consolidation between $ 90,000 and $ 110,000.
This is due to prospective market measures indicating higher inflation in the coming months in the fears of the trade war, which suggests that the Fed could have a limited window to implement aggressive rate reductions.
The data followed by Mott Capital Management show that two -year inflation exchanges have climbed almost 2.8%, the highest since the start of 2023. The five -year swap has a similar trend. Higher inflation exchanges indicate that the market expects inflation rates to increase in the future, encouraging investors to pay a higher bonus to protect themselves against the potential loss of power of Purchase by concluding exchange contracts linked to the IPC.
In other words, the continuous increase in these measures indicates that the progress of inflation towards the 2% target of the Fed has been blocked and that price pressure should increase in the coming years, probably in Reason for Trump’s prices.
In addition, some investment banks believe that a sweet reading of the January IPC will not see the Fed moving away from its directives of bellicic tariffs. In his testimony to Congress on Tuesday, President Jerome Powell said that the central bank was not in a hurry to reduce rates.
“We do not expect the progress of inflation to be sufficient to cause additional declines on Fed interest rates this year,” said the weekly RBC ticket, adding that the January report will show A limited softening in price pressures.
Blackrock said that the inflation of persistent services would prevent the Fed from reducing rates.
“We get a CPI for January this week. Even if the CPI report in December has shown that signs of inflation pressure are released, wage growth remains above the level that would allow inflation of Return to the 2% objective of the federal reserve, in our opinion.
Finally, BTC can get closer to the lower end of its negotiation range from $ 90,000 to $ 110,000 if the ICP prints warmer than expected.
