US July PPI fell to 4.7% YoY, lowest since March, supporting risk assets like BTC/ETH while Fed rate-hike odds for September dropped to 40%.
Macro & Markets ·
US Producer Price Index data for July arrived at 4.7% year-on-year, below the anticipated 4.9% and marking the lowest reading since March, while the monthly print held flat rather than advancing 0.2% as forecast. Combined with July Consumer Price Index moderating from 3.5% to 3.4%, the two consecutive months of easing inflation shifted market expectations: odds of a September Federal Reserve rate hike fell to roughly 40%, according to CME Group's FedWatch Tool. Bitcoin edged higher near $63,900 alongside gains in US equities as investors repriced rate-hike probabilities downward.
The softer inflation backdrop typically supports risk assets, yet messaging from Federal Reserve officials has tempered the bullish signal. Cleveland Federal Reserve Bank president Beth Hammack, one of three officials who voted for a rate increase in July, questioned whether recent cooler data would suffice to bring inflation to the Fed's 2% target, suggesting the path to price stability could extend three to four additional years. This hawkish commentary introduced caution into an otherwise supportive inflation narrative for cryptocurrencies.
Technical levels remain contested as Bitcoin consolidates, with long liquidations clustered around $61,000 representing a potential flashpoint for forced selling should prices decline that far. The gap between inflation relief and persistent Fed hawkishness leaves the near-term direction uncertain, with both support and resistance zones now under scrutiny.