Summary
- Market roundup for Tuesday cites cautious optimism amid Fed rate cut hopes.
- Bitcoin reverses pullback from month’s high, Gold bears keep reins despite softer U.S. Dollar.
- Mixed details of U.S. CPI for July back Fed doves and drag the Dollar lower.
- Extension of U.S.-China tariff pause and hopes of Russia-Ukraine ceasefire also favor optimism, but geopolitical tensions restrict positive bias.
Market Roundup for Tuesday: Cautious Optimism Prevails
The much-awaited U.S. inflation data favored market sentiment early Tuesday in New York. Adding to the positive bias were headlines surrounding the extension of the U.S.-China tariff truce and hopes of the Russia-Ukraine ceasefire. However, concerns surrounding the independence of key U.S. government institutions, tariff tensions linked to U.S. President Donald Trump, Israel’s Gaza ambitions, and nuclear aspirations of North Korea and Iran cap the market’s optimism.
Against this backdrop, Bitcoin (BTC) prints mild gains around $119K, reversing the previous day’s pullback from a month’s high, whereas the spot Gold (XAU) price drops to $3,335 while favoring bears after witnessing the biggest daily slump in three months. That said, the U.S. Dollar Index (DXY) snaps a two-day winning streak by falling to 98.25 at the press time of the early U.S. trading session.
U.S. Consumer Price Index (CPI) for July matched monthly forecasts of 0.2%, versus 0.3% prior, but reprinted the 2.7% YoY figures compared to 2.8% market consensus. Further, the CPI ex-Food & Energy, also known as the Core CPI, inched up to 0.3% while meeting expectations on a monthly basis, compared to 0.2% prior, but flashed a strong 3.1% yearly figure, surpassing the analyst estimations of 3.0% and the prior month reading of 2.9%. Overall, the price pressure appears firmer for the service inflation, but the goods inflation softened despite tariff woes, which in turn builds a dovish bias about the Federal Reserve (Fed) interest rate cuts and weighs on the U.S. Dollar.
Following the U.S. inflation data, the CME’s FedWatch tool raised the probability of a September Fed rate cut to 90% from 85% before the data. Also, the interest rate futures indicated that market participants now anticipate around 60 basis points (bps) of cuts by the end of the year, versus 57 bps of Fed rate cuts before the U.S. CPI report.
Elsewhere, China’s new measures to boost consumer and service-sector loans, as well as the continuation of the U.S.-China tariff truce, inspired the optimists, despite Monday’s losses on Wall Street. Notably, Bloomberg came out with the news suggesting China’s notices to the local companies to avoid using Nvidia’s H20 processors, especially if they are to be used for government-related purposes.
Meanwhile, U.S. President Donald Trump mentioned progress in the Ukraine-Russia peace talks ahead of a meeting with Russian President Vladimir Putin. Trump described the upcoming meeting as a “feel-out” session aimed at eventually bringing Putin and Ukrainian President Zelenskiy together for a truce. Still, Russia’s resistance to relinquishing control over occupied Ukrainian territories, as well as Moscow’s demand for Kyiv to abandon those regions, complicates the peace process and makes the path to a ceasefire more difficult.
Additionally, fears surrounding the independence of U.S. government institutions, especially the Federal Reserve (Fed), intensified after Trump fired the Commissioner of the Bureau of Labor Statistics (BLS) over revisions in job reports. The concerns grew after Trump appointed EJ Antoni, an economist without a statistical background, to lead the BLS. This raised doubts about Antoni’s credibility to lead the BLS and weighed on the U.S. Dollar. Trump also addressed recent confusion about gold tariffs, clarifying that gold would not be subject to new U.S. tariffs and accusing media outlets of spreading misleading information.
Crypto Universe News
Talking about the developments surrounding cryptocurrencies, Bitcoin (BTC) remains mildly bid, and so does the Ripple (XRP) price, but Ethereum (ETH) grabs the market’s attention while rising to a fresh high since December 2021.
Among the major news, a mysterious whale transaction of around 221K Ethereum (ETH) gained the market’s attention as it propelled the corporate ETH reserves to $13 billion.
Also read: Mysterious Whale Buys 221K Ethereum as Corporate ETH Reserves Hit $13 Billion
Meanwhile, an alleged Russian cybercrime group, GreedyBear Hackers, deployed “industrial scale” crypto theft of around $1.0 million.
Further, the U.S. Securities and Exchange Commission (SEC) officially announced a closure of its long-standing legal battle with Ripple Labs, offering a sigh of relief to the XRP traders.
Additionally, a Japan-listed company, Metaplanet, increased its Bitcoin (BTC) buying, adding another 518 BTC for about $61.4 million. With this, Metaplanet’s total BTC reserves jumped to 18,113 coins, or roughly $1.85 billion.
- Gold remains pressured for the second straight day, down 0.20% intraday to $3,335 by the press time.
- Bitcoin (BTC) reverses pullback from a month’s high, up 0.30% on a day near $119K at the latest.
- Ethereum (ETH) renewed a multi-year high, jumping to the highest level since December 2021, up 4.0% to $4,400.
- U.S. Dollar Index (DXY) snaps two-day winning streak, down 0.30% intraday to 98.20.
- Wall Street Benchmarks Trade Positive: Having witnessed losses the previous day, Wall Street benchmarks trade positively during the initial hours, following a slightly upbeat performance of stocks in Asia and Europe.
- WTI Crude Oil drops, reversing the previous day’s corrective bounce off a two-month low while declining to $63.50.
Risk catalysts eyed…
Having witnessed the initial reaction to the U.S. inflation data, the market players have little to concentrate on the economic calendar, apart from speeches from the mid-tier Fed officials. However, traders should also keep an eye on geopolitical headlines, including developments around U.S. tariffs, and tensions involving Russia, China, Ukraine, and Israel, for further direction.
Meanwhile, today’s US CPI was the last big U.S. data before next week’s annual Jackson Hole Symposium event for the global central bankers, where the Fed Chair Jerome Powell will also speak. Given the mixed US inflation signals fueling the dovish Fed bets, the US Dollar might extend its latest fall and allow the riskier assets like Bitcoin (BTC) to remain firmer. Gold, however, needs stronger catalysts, like trade and geopolitical fears, to regain upside momentum.
