Markets
Gold, Crypto Markets Eye US CPI Data for Potential Upside
The latest US Consumer Price Index (CPI) data shows year-on-year growth inflation down to 3%spurring optimism in the financial market. Amid this improvement, gold prices rose above $2,400 on hopes of potential interest rate cuts.
Cryptocurrencies, including Bitcoin, and stock prices are expected to benefit from the positive economic outlook.
CPI data boosts financial markets
The U.S. Consumer Price Index data shows inflation cooled to 0.1 percent from the previous month, bringing the annual rate to 3 percent, the lowest since the beginning of the pandemicThe decline marks the first significant decrease in three years, triggering positive sentiment across traditional and digital markets.
The overall index rate fell from 3.3% in May, with consumer prices falling. As a result, Gas prices fell 3.8%while accommodation and food prices increased by 0.2%.
The report changed the sentiments of the financial market. Gold prices rose above $2,400, reaching $2,414, marking a 1.8% increase in intraday trading. Stocks also experienced mixed reactions, with some assets posting gains. This increase is due to growing expectations for interest rate cuts from the Federal Reserve.
Chris Larkin, managing director of E-Trade, Trading and Investing at Morgan Stanley, noted that the CPI data brings the market closer to the expected interest rate cut.
He said that unless future data becomes “hot,” the Fed’s justification for not cutting rates could weaken.
He She said“A lot can happen between now and September 18, but unless most of the numbers return to ‘hot’ territory, the Fed’s reasoning for not cutting rates may no longer be justified.”
Meanwhile, these CPI data are in line with the federal ones Reserve annual inflation target of 2%. The Fed has maintained its benchmark interest rate amid falling inflation. Current data supports the idea of a potential easing of pressure on financial markets.
Positive impact of cryptocurrency markets
The favorable CPI data also benefited the cryptocurrency markets. In addition, a good macroeconomic news often leads to increased investment in risky assets like cryptocurrencies.
As the Fed Reserve eases market pressure, Investors will likely invest more in assets like BitcoinMeanwhile, Bitcoin has seen a 5.21% increase over the past week.
Australian dollar rises as weaker US CPI data suggests softer Fed rate hikes
The Australian dollar (AUD) is showing a positive trend, rising to 0.6798 against the USD Thursday before falling slightly to 0.6770. The daily graphic shows that the AUD/USD trading pair is bullish.
Despite no significant Australian financial events this week, the AUD remains strong. Based on this, traders are adjusting their bets after the release of US inflation data.
Let us remember that the Reserve Bank of Australia (RBA) is continues to delay rate cuts due to high domestic inflationThis move could further support the AUD’s recent gains.
Overall, the potential for interest rate cuts has created a strong indication of growth in the cryptocurrency markets. With the expected market surge, meme coins could also see a recovery.
Disclaimer: The views expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile and high-risk asset class.
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