US CPI In Focus Today
BTC is starting to grind higher again through the middle of the week. The futures market rose firmly yesterday, buoyed by better risk appetite as traders reacted to weaker-than-forecast US PPI data. The drop in producer prices has fuelled some speculation that today’s headline US CPI release might surprise to the downside too. Given the major focus on today’s data ahead of next week’s FOMC meeting, BTC could see some volatility today if we do get a downside surprise. In that scenario, USD is likely to be heavily sold as traders ramp up easing bets through the remainder of the year. Clearly, the risk to this is that if CPI rises today as expected (2.9% from 2.7% prior), this will likely fuel a softening of easing expectations beyond next week which could see USD squeezing higher and risk assets, BTC included, coming under pressure.
Risk Appetite & Fed Expectations
Given BTC’ tendency to trade in line with broader risk assets, the Fed remains the key driver for now. The fact that we haven’t seen a USD sell off despite weaker jobs data and PPI yesterday shows how much focus traders are putting on this CPI release. At the latest FOMC, Powell acknowledged weakness in the jobs market as a factor calling for fresh easing but cited remaining inflation risks as a headwind to that. As such, if traders get evidence today that those inflation risks have cooled somewhat, this should be firmly bullish for risk appetite. If those inflation risks look more entrenched, however, this will create more uncertainty near-term and could see BTC correcting lower for now.
Technical Views
BTC
For now, BTC remains underpinned by the $108,855 level and while that marker holds, focus is on a continuation higher and a fresh bull phase towards $136,395 over the coming weeks and months. Should we break current support, however, focus will turn to the $100k mark as the deeper level to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.