Last minute! Inflation Dump to Bitcoin and Ethereum, Here is the First Reaction of the Market!

long awaited US inflation data announced.

Accordingly, annual inflation in the US for August was 8.3%, while monthly inflation was 0.1%. Annual inflation expectation was 8.1%, monthly inflation expectation was -0.01.

Core CPI, which is closely followed by the FED, was announced as 6.3% annually. The expectation was 6.1%.

Bitcoin and the Initial Reaction of the Markets

When we look at the first reaction of the markets after the inflation data came above the expectations, the dollar index (DXY) rose sharply to the levels of 108.6.

Along with the movement in DXY, US futures depreciated by nearly 2% on the higher-than-expected inflation data.

After the inflation data, it fell to $ 21700 in Bitcoin.

Now, at 16.30, the opening of the US stock markets will be followed.

Inflation Will Shed Light on FED!

Fed tightening policy bitcoin and highly effective on risky assets. One of the main factors determining the direction of this tightening policy of the FED is the inflation data in the USA.

In every statement they have made recently, FED officials underline that the rate and severity of interest rate hikes depend on data. This increases the importance of the economic data to come before the FED’s interest rate decision on September 21.

The fact that the inflation data is above the expectations signals that the FED will continue its hawkish stance.

What Did Economists Say Before Data?

Jefferies chief economist Aneta Markowska:

“If it does, the risk could weaken a bit. Prices of energy products decreased by 10.2%. This could result in a half-point decrease in the percentage. I think core inflation will be more important.

I don’t think this inflation data will change much for the Fed. Even as inflation slows, I think it’s a problem for the Fed that the growth momentum is increasing, in part because of lower energy prices. This increases purchasing power.

That means above-trend growth at a time when the Fed should be designing below-trend growth.”

T. Rowe Price chief US economist Blerina Uruci:

“Due to base effects, annual core inflation will likely accelerate in the next two reports, which will lead to uncomfortable headlines for the Fed.

Central bank officials will monitor the quarterly and semiannual annual rate. But they’re also sensitive about how that will look to the public and to Congress. That means even more reasons to maintain a hawkish focus.”

Diane Swonk, chief economist at KPMG:

“This is where the Fed can slow down and we’ll start to see if there is a change in fundamental patterns.”