Fed Rate-Hike Pause Odds Soar as US Inflation Data Looms

The crypto market is on high alert as traders weigh the impact of upcoming US inflation data. The release of Consumer Price Index (CPI) and Producer Price Index (PPI) data this week will be crucial for determining the Federal Reserve's interest-rate policy.

Last month's CPI and PPI results surprised to the downside, with the former seeing its largest monthly decline since April 2020. Nonfarm payrolls numbers also showed weaker-than-expected labor-market conditions, bolstering odds of a more dovish Fed going forward.

Markets have switched from a 0.25% rate hike probability to a continued pause as the most likely outcome at its September 16 meeting. The CME Group's FedWatch Tool shows a 56% chance of a pause as of Monday.