The calm after the inflation storm
Nasdaq => The index drops to 12000
BTC/USD =>The cryptocurrency falls to 20k
EUR/GBP=> The pair rises above 0.8650
Nasdaq steadies after a 5% fall
The Nasdaq took a hammering yesterday after US inflation data caught the market off guard and was hotter than expected. Even core CPI rose significantly to 6.3%, up from 5.9%. The data suggests that inflation remains a clear threat to the US economy and the Federal Reserve is likely to continue to act aggressively to bring consumer prices back to 2%. This is going to be a long slow process. More hawkish Fed expectations are acting as a drag on risk assets. The Nasdaq dropped 5% yesterday and holding steady at around 12000. Attention is now on PPI wholesale inflation data, which is expected to cool and could offer support to stocks.
|US CPI YoY August||Actual: 8.3% (0.3%)||Previous: 8.5%|
Where next for the Nasdaq?
The Nasdaq once again failed at the multi-month falling trendline, wiping out the previous week’s gains. The RSI below 50 supports further selling. Bears need to break below 12000, the September low to extend the downward trend. This opens the door to 11500, the July 13 low, ahead of 11000 the 2022 low. Buyers need to rise over 12890 to bring 13250 into target.
BTC/USD drops 8% post inflation print
BTC/USD is holding steady at 20,300 after tanking over 7% over the past 24 hours following the release of the keenly awaited US inflation data. Inflation was hotter than expected, which sent fear through the market. BTC/USD sank from 22,500 before the release to a low of 19,950. Ether moved in a similar fashion, falling 6% to trade below 1600 after the data caught the market completely off guard and as it looks ahead to the Merge, which takes place tomorrow. Given the jump in ETH/USD’s price last month, the Merge appears to have been priced in. This has been circulating for some time, so there is no element of surprise, so a strong rally is not likely. The question is – is this the start of something bigger for Ether?
In crypto news, California’s new asset bill looks set to change the crypto landscape, which is significant given the state’s importance within the industry. The bill waiting to be signed by Governor Gavin Newsom would ban Californian entities from dealing with stablecoin unless the coin is issued by a bank or is fully backed by securities. This is a step towards broader market safety and should give some structure to the market. But this bill will not be enforced until 2025, when the crypto space will undoubtedly change dramatically.
EUR/GBP awaits UK inflation data
EUR/GBP gained ground on Tuesday even as the markets digested disappointing German ZEW economic sentiment, which fell to its weakest level since the financial crisis. The pound fell after UK jobs data showed that unemployment fell to its lowest level since 1974, which put upward pressure on wages, whilst vacancies fell to a 2 year low. Today the pair is holding steady ahead of another big day with the release of UK inflation data, eurozone industrial output, and speeches from EU commotion President Ursula von der Leyen and ECB President Christine Lagarde. Hot UK inflation could raise the prospect of more hikes.
UK CPI August YoY
|Actual: 3.6% (0.2%)|
Expected: 10.2 (0.1%)
Support can be found at 0.8650 (weekly low) and 0.8580 (20 sma).
Resistance for the index can be seen at 0.87 (round number) and 0.8723 (September high).