Crypto Market on Edge Ahead of US CPI Inflation Data Release

The US CPI inflation data release on September 11 is a closely watched event for crypto market participants, who are bracing for its impact. The current expectation is that the August report will show a 0.4% month-over-month rise in inflation, up from 0.1% in July, with annual inflation expected to hold steady at 3.4%. Core CPI is projected at 0.2% MoM, similar to 0.2% previously.

JPMorgan, Goldman Sachs, Barclays, Morgan Stanley, Wells Fargo, and other Wall Street giants estimate a 3.4% median CPI inflation forecast. However, Moody's and Nomura expect easing to 3.3%. Goldman Sachs Short Macro Trading's Brian Bingham notes that the Fed is heavily focused on a single upcoming CPI print, with Fed Waller's recent dovish remarks confirming the FOMC Board skews dovish.

The crypto market is in panic mode over rising uncertainty and rising Fed rate hike odds. The CME FedWatch Tool shows a 69% probability of a 25 bps Fed rate hike in September, following hot US PPI inflation at 5.4%. JPMorgan expects the Fed to deliver its first 25 bps rate hike in December, bringing the policy rate to 3.75-4.0%. However, oil prices are falling more than 1.50% to near $101 per barrel.