The inflation reading above forecasts in the US surprised markets, which had expected a inflation slowdown. We see a decline in sentiment around risky assets:
- The US dollar is gaining again. A 75bp hike in September is almost certain but a small decline despite falling gasoline prices should perhaps challenge the Fed. Core inflation rose above expectations and July reading:
- The Fed's pivot, played up somewhat 'by force' by the markets in the context of the weak reading, appears to be a mirage. On the Fed's September table could be a hike of as much as 100 bps (!), which the market is currently pricing in a 23% probability;
- Cryptocurrencies, despite the upcoming Ethereum Merge, have not been able to resist huge selling pressure. Bitcoin slides below $22,000, Ethereum falls below $1,700;
- Among the so-called altcoins, Graph (-10%), Kusama (-8%) and Stepn (-6%) are losing the most heavily.
Ethereum chart, H1 interval. The inflation reading caused a sharp decline and stopped ETH from climbing above the 200-session average, which is now again a key short-term resistance (around $1730). The RSI indicator cooled immediately from levels near 70 to below 30 points, which illustrates the panicky reaction of sellers. Source: xStation5
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile appThis content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
