- Higher-than-expected inflation may delay Fed rate cuts, strengthening the dollar and pressuring risk assets like stocks and crypto.
- A lower CPI reading could boost equities and gold, weakening the overvalued U.S. dollar and supporting broader market liquidity.
- Bitcoin and Ethereum could see sharp moves post-CPI, with inflation trends shaping future monetary policy expectations.
The release of US CPI inflation metrics is scheduled for 13h30 GMT today. The forthcoming data release holds special interest for markets because of rising inflation expectations from last week’s Michigan Sentiment Index results.
A higher-than-expected CPI figure may lead to tighter monetary policy, affecting risk assets such as Bitcoin and Ethereum. Lower inflation data could ease concerns about interest rate hikes, potentially boosting investor confidence across financial markets. Thus,The Fed is expected to proceed at a measured pace, signaling fewer rate reductions in 2025. However, the U.S. Dollar Index (DXY) failed to rally despite this hostile tone. Market positioning suggests a heavy long bias on the dollar, and interest rate differentials indicate it may be overvalued relative to global currencies.
Stock Market Outlook: How CPI Data Shapes the Next Move
According to Ash Crypto, he forecast a 2.9% inflation thus, If CPI comes in lower than 2.9%, it would signal easing inflationary pressures, reinforcing expectations of Federal Reserve rate cuts.
🚨 ALERT 🚨
— Ash Crypto (@Ashcryptoreal) February 12, 2025
🇺🇸 U.S. CPI DATA IS COMING
IN 1 HOUR, 8.30AM EST
FORECAST IS 2.9%.
➡️ Less than 2.9% – Bullish 🟢
➡️ 2.9% – Neutral
➡️ Greater than 2.9% – Bearish 🛑
Conversely, if inflation remains at 2.9%, markets may react neutrally, with limited movement, as this aligns with current economic forecasts and expectations. However, if CPI exceeds 2.9%, it could trigger a bearish reaction.
If inflation exceeds expectations the Fed’s plan to reduce interest rates could face delays which would result in increased rates for an extended period. Market forces would trigger a stock market downturn particularly affecting interest-rate-sensitive sectors alongside rising bond yields that would strengthen the U.S. dollar currency while diminishing both risk assets and bullion value.
Potential Impact of CPI Data on Broader Markets
The upcoming Consumer Price Index (CPI) release holds great importance for it will drive substantial changes within financial markets. A lower-than-expected inflation reading combined with dollar struggles would likely result in a sudden dollar price decline. The anticipated move could create market support for risk assets along with equities and gold and modify liquidity conditions in all financial markets.
Following today’s CPI release, cryptocurrency markets may experience increased volatility as traders react to new economic data. If inflation exceeds expectations, digital assets could see short-term declines due to concerns over potential Federal Reserve rate hikes.
