US dollar steadies as traders await inflation data, Bitcoin slides
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THE US dollar steadied on Wednesday (Jan 10) in cautious trading as investors awaited US inflation data later this week, while Bitcoin fell after US securities regulator said a social media message posted on its account was fake.
The Securities and Exchange Commission (SEC) said someone briefly accessed its X social media account and posted a false message saying it had approved exchange traded funds (ETFs) for Bitcoin, a move eagerly awaited by the crypto industry.
The SEC will decide later in the day whether to approve an application from asset managers Ark Investments and 21Shares to launch a spot bitcoin ETF. More than a dozen Bitcoin ETF applications, including from BlackRock, Fidelity and VanEck, are also pending with the agency.
Bitcoin slid 3.3 per cent to US$44,600 after surging to a 21-month peak of US$47,897 on the fake post.
Anticipation of a positive SEC decision on ETFs, which is likely to draw billions in new investments, has boosted Bitcoin prices in the past two months.
“The reality is most who have followed the saga have moved on and the green light from the SEC is fully priced,” said Chris Weston, head of research at Pepperstone.
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In the meantime, the dollar index, which measures the US currency against six rivals, flattened at 102.49, after gaining 0.215 per cent on Tuesday.
The index is up 1 per cent this month, after dropping 2 per cent in December as traders reassess how steep and early the rate cuts from the Fed are likely to be.
In December, the Fed surprisingly projecting 75 basis points (bps) of rate cuts in 2024, turbo-charged market expectations of easing with traders last month anticipating as much as 160 bps of cuts. Markets are currently pricing in 140 bps of cuts this year.
Traders are now focused on the release of the US consumer price index report on Thursday. The report is expected to show headline inflation rose 0.2 per cent in the month and by 3.2 per cent on an annual basis.
“The consolidation in US yields prevents a further selloff in the greenback before more clarity on inflation,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The higher shipping costs due to Red Sea tensions may not show in the December data, hence we may not see the Fed doves take a break this week.”
Recent attacks from Yemen-based Houthis in the Red Sea have disrupted international commerce on the key route between Europe and Asia, as the three-month-long war between Israel and Hamas in Gaza spills over into other parts of the Middle East.
In other currencies, the euro rose 0.11 per cent to US$1.0944, while the yen weakened 0.57 per cent to 145.29 per dollar.
The Norwegian crown rose 0.28 per cent against the euro to 11.2947 after data showed Norway’s core inflation rate fell more than expected in December to 5.5 per cent from 5.8 per cent in November. That could help bring forward the central bank’s planned policy easing.
The Swedish crown was little changed against the euro at 11.1980 after data showed retail sales in Sweden fell 0.5 per cent in November from October and were down 1.7 per cent from a year earlier.
Morgan Stanley recommended long positions on NOK/SEK as the Norges Bank is sharply slowing its Norwegian crown sales, while the Riksbank’s FX-hedging programme is about to end.
“The absence of central bank flows suggests that NOK/SEK can trade more on fundamentals – which point to a higher NOK versus SEK. Norwegian data have held up, while Swedish data have disappointed the most in the G10.” REUTERS
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