Wall Street Expects US CPI Data to Fall as Crypto Eyes Further Recovery
Wall Street anticipates a further drop in the consumer price index (CPI) inflation data after the US Bureau of Labor Statistics released last month’s CPI performance. January’s inflation rate in the United States is at 6.25, the lowest since October 2022.
Assessing January’s CPI Data
According to last month’s recently released CPI metrics, core inflation in the US, excluding necessities like food and energy, is expected to drop from 5.7% to 5.4%. Meanwhile, the CPI data is vital information to see if the US Federal Reserve will implement a different monetary policy.
The Fed has eased its rate hike by 25 bps at the start of the month due to the cooling inflation in the United States. Furthermore, the US stock indexes tied to both futures, Dow Jones, Nasdaq, and S&P 500, are currently in the green after a 1% jump during Monday’s trading session.
Due to the positive development, Wall Street expects a further drop in the US CPI data for last month as oil and food prices continue to fall. Similarly, JPMorgan estimated that there is a 70% chance of CPI dropping down to 6.3%.
Its trading desk predicted that the CPI would likely fall below 6.3%, pushing the market up by 2.5% in the coming weeks. Furthermore, the likes of Bank of America, Barclays, and Scotiabank anticipate further fall in CPI to 6.1%.
On the other hand, Credit Suisse, JPMorgan, Wells Fargo, and TD Securities see a CPI drop to 6.2%. However, others like Goldman Sachs, VISA, and Morgan Stanley expect a CPI fall from January to 6.4%.
On a broader scale, the fall in inflation signifies a massive market win, as sentiments have been positive since the start of the year.
Will Crypto Market React?
The broader crypto market is struggling due to the ongoing scrutiny from the United States’ regulatory agencies against digital asset services providers. According to reports, the Securities and Exchange Commission (SEC) is planning to limit or ban crypto staking and stablecoins.
Thus, crypto traders await the CPI data to determine their next move, hoping to continue the market’s recovery, which began in January. For most of last year, the crypto industry has witnessed tumultuous periods starting with the Russian-Ukraine war, which disrupted the global market, the Terra Luna ecosystem collapse, bankruptcy cases, and the FTX crash in November.
However, the start of 2023 ushered in a positive beginning to the year. Bitcoin, the largest crypto asset by market cap, is trading at $24,593 and is up 8.1% over the past 24 hours. The general crypto market sentiment has been positive as investors expect an inflation decline in the coming weeks.
As usual, the US Dollar Index (DXY) slumped significantly today while the crypto market moved in the other direction. Market observers believe a further fall in the DXY is a crucial factor.
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