In cautious trading on Wednesday, the dollar remained stable ahead of U.S. inflation data that is expected later this week and might impact the Federal Reserve’s policy. Meanwhile, bitcoin saw volatility following the market tremors caused by a spoof social media post.
According to the U.S. securities regulator, a phony message claiming that it has authorized exchange-traded funds (ETFs) for bitcoin was briefly posted on its X social media account. Spot bitcoin exchange-traded funds (ETFs) have not yet received SEC approval, according to the agency.
Following the phony post, bitcoin shot up to a new 21-month high of $47,897, but it quickly crashed to below $45,000 as the SEC removed and denied the content.
The largest cryptocurrency in the world was down 0.5% at $45,897 last time. In the last two months, the price of bitcoin has increased due to anticipation of a favourable ruling on ETFs by the SEC, which is expected to attract billions of new investments.
The dollar continued to lead the currency market; the dollar index, which compares the value of the US dollar to six competitors, was last seen at 102.53 on Tuesday, up 0.215% from the previous day.
After falling 2% in December, the index is up 1% this month as investors reevaluate how abrupt and severe the Fed’s rate cuts are likely to be.
The market’s views of easing were boosted last month by the Fed’s unexpectedly dovish stance in December, when it forecast 75 basis points (bps) of rate cuts in 2024. Traders were expecting as much as 160 bps of cuts.
Since then, markets have reevaluated the likelihood and are now pricing in 140 basis points of cuts this year.
In order to gauge the chance of a rate cut in March, traders will be concentrating on the release of the U.S. consumer price index report on Thursday. It is anticipated that the report would demonstrate a 0.2% monthly increase in headline inflation and a 3.2% annual increase.
According to the CME FedWatch tool, there is a 64% chance that the Fed will ease in March based on Fed funds futures, down from 80% one week prior.
In other words, the sterling was up 0.03% on the day at $1.2709, while the euro was down 0.05% to $1.0926. The value of the Japanese yen fell by 0.19% to $147.74.
To $0.669, the Australian dollar increased by 0.16%.
November saw a dramatic decline in core inflation in Australia and a slowdown in overall inflation that was closer to a two-year low. These less-than-expected results supported market expectations that interest rates would not need to climb further.
To $0.624, the New Zealand dollar weakened by 0.02%.
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