Soft US inflation data for August is – at least temporarily – pushing crypto prices higher early on Wednesday.
The producer price index (PPI)Inflation measures wholesale level, decreased 0.1% month-over month in August compared to analyst estimates of an increase of 0.3% and the previous month’s increase of 0.9%. Years over year, PPI grew by 2.6%, down from 3.1%earlier and sharply lower than forecasts for 3.3%.
The core PPI, which stripes out food and energy costs, also fell 0.1% in August Verus a prognosis increase of 0.3% and July’s increase of 0.7%. Year-over-year-old ppi rose only 2.8% against estimates for 3.5% and July 3.4%.
The reaction to crypto markets was quick with bitcoin Rising to $ 113,700 at the time of press, ahead of more than 1% over the last 24 hours. Ether (Eth) Rose with a similar quantity and Solana’s sun (Sun) Continued the recent better than 3.3% to $ 224.
This latest PPI reading followed July’s blowout of the PPI increase, which repeated inflation related to a rapidly weakened labor market. Dealers monitor tomorrow’s consumer price index (CPI) Inflation report, an important data point to Asses prior to Fed’s interest decision next week.
“It’s exactly the PPI data we need to cheer for if you assume they want to help suppress CPI-inflation, end the recent line of reinflation and provide a great opportunity to focus explicitly on recent labor weakness,” said Caleb Franzen, founder of Cubic Analytics, in an X-Post.
Bulls have reason for caution
All in all, it is generally assumed that lighter monetary policy is good for risk assets, crypto among them.
Last month, Federal Reserve President Jerome Powell Flip from HAWK to Dove and now a number of weak financial reports may point to the need for a number of central banking cuts. And yet, Bitcoin has fought – rising as the news from Powell or the reports hit, but then pulls back just as quickly.
Bitcoin’s price action has been particularly confusing as gold has behaved exactly as investors could expect – pushing for what looks like new record heights with each fresh Dovish news article.
While dealers continue to expect Fed to reduce the rates by 25 basic points at its political meeting next week, they have increased betting on a possible 50 basic point movement. According to CME Fedwatch, the odds of a 50 -point cut have now risen to 10% against 7% before the PPI report and 0% a week ago.
