MARKET COMPASS
US CPI Data and Softening Tariff Tensions
- Global markets are stabilizing after the optimism following the progress in the talks between the US and China over the weekend.
- This optimism seems to be giving way to some cautious stance due to the ongoing negotiations and trade uncertainty.
- On the other hand, China lifted the ban on deliveries of Boeing jets following the temporary customs agreement with the US, taking another step toward resolving the standoff between the two countries.
- Developments towards the crypto asset ecosystem are on the “positive” side. The statements of New York Mayor Adams and SEC Chairman Atkins can be considered as important steps towards the adoption of digital assets.
- We maintain our short-term view on major cryptocurrencies as “bullish with intermediate corrections”. US inflation indicators, which will be released today, may have an impact on prices by giving clues about the US Federal Reserve’s (FED) interest rate cut course.
US Consumer Price Index: CPI
US President Donald Trump’s unpredictable behavior and tariffs have certainly not made things easier for the US Federal Reserve (FED). The latest inflation data may have provided some relief for the Federal Open Market Committee (FOMC), which is trying to make decisions in a challenging environment. However, we know that the FED generally avoids making decisions based only on one-period data.
Consumer prices in the world’s largest economy recorded the largest monthly decline (-0.1%) in March since May 2020. The biggest contributor to this was gasoline prices, which fell by 6.3%. However, we also saw lower figures in core data, which excludes food and energy prices. Core CPI rose by 0.1% (unrounded 0.06%), the lowest increase since January 2021. Airline ticket prices (-5.3%), out-of-home accommodation (-3.5%) and used car prices (-0.7%) were the notable components of the slowdown. The annual headline CPI decelerated to 2.4% (February: 2.8%) and reached the level of September 2024.
Source: Bloomberg
As can be seen in the chart above, core services continue to hold the largest share in the overall price level. Our expectation is for a monthly increase of 0.16% and an annualized CPI of around 2.28%. Nevertheless, the market will react according to the consensus expectation.
A lower-than-expected CPI reading could mean that the Fed will be in a better position to cut interest rates, which could have a positive impact on digital assets. A figure that exceeds forecasts, on the other hand, has the potential to exert pressure by reinforcing expectations that the FED will not rush into another rate cut.
Digital Compass
In the US, the locomotive of the world economy, we consider the strategic crypto reserve, which started with Trump’s nomination process, as a very important development. However, the fact that the markets had already priced in the “best case scenario” before and after the US elections and the “less than perfect” news on this issue put pressure on digital assets. We continue to keep the strategic reserve issue in our equation as a positive variable for cryptocurrencies in the long run. Considering the recent developments, we maintain our bullish expectation for the medium and long term.
For a detailed review of our twice-daily technical analysis report and the latest developments in digital assets click here.
HIGHLIGHTS OF THE DAY
Important Economic Calendar Data
| Time | News | Expectation | Previous |
|---|---|---|---|
| Solana (SOL) Ecosystem Call | |||
| XRP (XRP) AMA | |||
| Mask Network (MASK) Coincheck Listing | |||
| Zilliqa (ZIL) Zilliqa 1.0 Testnet Ends | |||
| WhiteBIT Coin (WBT) 39.50MM Token Unlock | |||
| BounceBit (BB) 42.9MM Token Unlock | |||
| 12:30 | US CPI (MoM) (Apr) | 0.3% | -0.1% |
| 12:30 | US Core CPI (MoM) (Apr) | 0.3% | 0.1% |
| 12:30 | US CPI (YoY) (Apr) | 2.4% | 2.4% |
| 12:30 | US Core CPI (YoY) (Apr) | 2.8% | 2.8% |
INFORMATION:
*The calendar is based on UTC (Coordinated Universal Time) time zone. The economic calendar content on the relevant page is obtained from reliable news and data providers. The news in the economic calendar content, the date and time of the announcement of the news, possible changes in the previous, expectations and announced figures are made by the data provider institutions. Darkex cannot be held responsible for possible changes that may arise from similar situations.
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