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CPI inflation data from the USA with a key impact on the dollar and cryptocurrency exchange rates

CPI inflation data from the USA with a key impact on the dollar and cryptocurrency exchange rates

created Daniel KosteckiApril 10 2024

Today, the highlight of the day will be the publication of inflation data from the US. It can be said that regarding this topic, it was easy and the disinflation processes have definitely slowed down for consumer inflation, and only continue to smolder for core inflation. Hence, investors may pay more attention to deviations from the consensus than to disinflationary trends, apart from core inflation.

Expectations ahead of today's data

The U.S. annual inflation rate likely accelerated for the second month in a row to 3,4% in March 2024 from 3,2% in February. This is expected to compare with the previous month CPI will increase by 0,3%, slightly less than 0,4% in February. Airfare and used car prices are expected to fall, while the cost of living will rise at a slower pace. However, gasoline prices are expected to rise faster than last month.

Meanwhile, core inflation is likely to have slowed to 3,7% on an annualized basis, the lowest level since April 2021, from 3,8% in February. The monthly rate is also expected to decline to 0,3% from 0,4%.

Bond yields in a key place

After the latest data from the labor market, which, apart from inflation, is monitored by Fed and forms the basis for interest rate decisions, U.S. bond yields rose to their highest level since November 2023, reaching 4,46%. However, yesterday, the day before today's inflation data, yields quickly retreated to 4,36%. Thus, today's publication will be able to show whether yesterday's return is just a correction or perhaps a more lasting trend.

Decrease in profitability and the euro and dollar exchange rates

April 2 steam course EUR / USD recorded its local low, going down to its lowest level since February. Since then, there has been a fairly rapid rebound from 1,0730 to 1,0850 today. With yields falling, the US dollar may lose value, and this could also help other risky assets, including cryptocurrencies.

A lower inflation reading may favor BTC

Price Bitcoin is approximately 6,5% from its all-time high with 9 days left until the halving. Data below the consensus may support BTC in reaching a record valuation again before the halving. Will this actually be the case? We will find out after 14:30 p.m., when data from the United States will be published.

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About the Author
Daniel Kostecki
Chief Analyst of CMC Markets Polska. Privately on the capital market since 2007, and on the Forex market since 2010.