Crypto Market Awaits US CPI Figures As Fed Rate Cut Hopes Fade
Highlights
- The May US CPI figures are set to be released on June 11.
- Data in line with or below expectations is positive for the market.
- CME FedWatch data shows that the Fed is unlikely to cut rates in the first half of this year.
The US CPI inflation data is the next macro fundamental that crypto market participants have their eyes on, following the release of a strong US jobs data on June 6. The CPI figures could provide insights into whether the Fed is likely to cut interest rates later this year, even as hopes for a rate cut in the first half of the year fade.
Crypto Market Waits On US CPI Inflation Data
The crypto market awaits the May US CPI inflation data, which will come out on June 11. This is significant considering the impact that this macro data has on the market.
Inflation data in line with or below expectations is usually bullish as it could motivate the Fed to lower rates. Rate cuts typically inject more liquidity into the market, which is bullish for the Bitcoin price and other crypto assets.
MarketWatch data shows that experts predict the CPI data to come in at 0.2% month-over-month (MoM) and 2.5% year-over-year (YoY). Meanwhile, the Core CPI is expected to come in at 0.3% MoM and 2.9% YoY.
The US CPI data release will follow the US jobs data, which came out on June 6. The US economy added 139,000 jobs last month, which was above the expected 130,000. Meanwhile, the unemployment rate remained steady at 4.2%.
This prompted US President Donald Trump to call for a 100 Bps Fed rate cut ahead of the June FOMC meeting. However, strong job data usually motivates the Fed to keep rates steady as it signifies that the US economy is healthy and that there is no need for monetary easing.
This explains why the odds for the Fed to keep rates steady shot up after the data release on Friday. CME FedWatch data shows that there is a 97.4% chance that interest rates remain unchanged between 4.25% and 4.5% following the June FOMC meeting. There is also an 83.3% chance that it will stay this way following the July FOMC meeting.
However, there is a 51.8% chance that there will be a Fed rate cut following the September FOMC meeting. The incoming US CPI data could further make a case for rate cuts in the second half of the year. It is worth mentioning that the three rate cuts that happened last year were in the second half of the year.
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