Tuesday's dollar surge came to an end as traders maintained their bets for a wave of
rate cuts from the Federal Reserve this year, believing that the United States’ inflation
rate is adequately slowing down.
As more people were optimistic that the spot bitcoin exchange-traded funds (ETF) will soon
be approved, the price of bitcoin in cryptocurrencies hovered around its highest level since
April 2022.
Following a broad decrease in the greenback as U.S. Treasury yields dropped, the
Japanese yen moved away from the 145 per dollar level, while the euro last stood at 1.0950
dollars, away from its previous three-week low of 1.0877 dollars.
The New York Fed’s most recent Survey of Consumer Expectations, which revealed that
American consumers’ short-term inflation projections dropped to their lowest point in almost
three years in December, partially explained the actions.
Later this week, data on U.S. inflation is anticipated, which might shed more light on the
extent of the Fed’s leeway in easing rates this year.
“The data regarding inflation expectations going forward was the big story last night, the
catalyst,” according to Capital.com senior financial market analyst Kyle Rodda.
“The likelihood that the Fed will be able to lower rates fairly soon is increased even though
there is still a tight labor market and those kinds of disinflationary impulses in the US.”
Futures indicate that the Federal Reserve will ease policy by around 140 basis points this
year.
After rising one percent last week, the U.S. dollar decreased somewhat by 0.08 percent to
102.22 against a basket of currencies.
The risk-averse Australian and New Zealand dollars both rose, while the sterling increased
by 0.04 percent to 1.2754 dollars.
Since last Friday, when it hit a three-week low of 0.6641 dollars, the Australian dollar has
gained 0.04 percent to reach 0.6723 dollars.
The kiwi increased by 0.05 percent to 0.6256 dollars and was still quite far from the three-
week low of 0.6182 dollars set on Friday.
Data released on Tuesday in Asia revealed that core inflation in the capital of Japan
decreased in December for the second consecutive month, relieving some of the pressure
on the Bank of Japan (BOJ) to quickly end its extremely loose monetary policy.
After the announcement, the yen barely moved and was last seen up 0.17 percent at
143.975 per dollar.
In other news, bitcoin continued to float around 47,000 dollars, peaking at 46,923 dollars the
previous session, after hitting a 21-month high of 47,281 dollars.
In a move that could lead to the U.S. securities regulator approving the proposed spot bitcoin
ETF this week, many investment managers revealed on Monday the fees they intend
to charge.
“Clearly, there are fundamental reasons to be bullish about this: it demonstrates a deeper
integration of cryptocurrency assets into the traditional financial ecosystem, which means
that demand and flow for bitcoin and other cryptocurrencies will probably increase," said
Rodda of Capital.com.
“I would be extremely cautious of a scenario where you buy the rumor, sell the fact.” The
value of Ether, the second-biggest cryptocurrency, remained stable at $2,314.70.
