Bitcoin
Stock markets fall, dollar remains firm as the Fed’s focus intensifies; encryption soars
By Kevin Buckland
TOKYO (Reuters) – Asian stocks fell while the dollar held firm on Tuesday, as investors awaited the minutes of the Federal Reserve’s latest monetary policy meeting to assess the timing and extent of possible interest rate cuts this year.
Gold pulled back from Monday’s all-time peak, while crude oil fell on concerns that US interest rates would remain high for longer as Fed officials maintained a cautious view on a recent reduction in inflation .
Cryptocurrencies ether and bitcoin hit new six-week highs amid speculation that the US Securities and Exchange Commission (SEC) may approve a spot ether exchange-traded fund (ETF).
Markets are currently considering about 41 basis points of rate cuts from the Fed this year, with a full quarter-point cut expected in November.
Traders rushed to rebuild easing bets after data from earlier this month showed consumer price pressures were mitigated in April following a three-month run of positive surprises at the start of the year.
Still, Fed officials are reluctant to declare that inflation is under control, with Vice President Philip Jefferson saying on Monday that it was too early to say whether the slowdown is “lasting,” and Vice President Michael Barr saying a restrictive policy needs more time. .
The minutes from the Fed’s latest meeting, scheduled for Wednesday, could provide valuable insight into the future policy trajectory, although the deliberations come before last week’s softer CPI reading.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.9%, weighed down by the Hang Seng’s 1.9% pullback from Monday’s multi-month peak.
Japan’s tech-heavy Nikkei rode the Nasdaq’s overnight gains to a record high before reversing course to trade 0.1% lower.
Nasdaq futures fell 0.06%. S&P 500 futures were flat after Monday’s 0.1% gain.
“Market sentiment remains relatively robust, with implied volatility low, supported by increased confidence in US rate cuts this year,” Kyle Rodda, senior markets analyst at Capital.com, wrote in a note.
At the same time, record highs for metals such as gold and copper “are seen as a sign that economic activity is improving globally, and that could be a factor keeping inflation stable,” Rodda said.
Gold fell 0.3% to around $2,417 per ounce after hitting the $2,450 mark for the first time overnight.
The dollar maintained its position against major peers, with the dollar index steady at 104.62 after recovering from a five-week low of 104.07 reached on Thursday.
The 10-year Treasury yield remained little changed at 4.4433% after rising 1.7 basis points on Monday.
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Brent crude futures fell 0.7% to $83.17 a barrel and U.S. West Texas Intermediate (WTI) crude fell 0.7% to $79.22.
Meanwhile, Monday’s standout performers hit new highs as traders bought cryptocurrencies following a report that the SEC had abruptly asked exchanges wanting to trade ether ETFs to update regulatory filings, increasing bets on that approval could occur this week.
Bitcoin rose to $71,957 and Ether jumped to $3,720.80, both reaching levels not seen since April 9.
“Speculation around the ether ETF certainly played its part in the move, adding fuel to the crypto market fire that reignited following last week’s cooler US CPI data,” said IG analyst Tony Sycamore.
Sycamore expects bitcoin to retest the all-time high of $73,803.25 in the coming days before rising towards $80,000.
(Reporting by Kevin Buckland; Editing by Subhranshu Sahu)