Forecasts point to 0.1% month-on-month growth in the headline CPI for July, up from June’s –0.4% reading. The year-on-year figure is expected at 3.4%, down from 3.5%, and annual core CPI inflation is seen dropping to 2.5% from 2.6%.
According to ING, a softer-than-expected print could weaken the dollar, an outcome that could bode well for the crypto market.
In bitcoin’s case, traders are hoping the report will push the price out of its recent trading range of $62,000 to $66,000. However, the way BTC options are currently priced suggests low expectations for CPI-driven fireworks.
Markus Thielen, founder of 10x Research, said the market is pricing a post-CPI swing of just 1.3%, which is nothing out of the ordinary.
Data tracking website Laevitas made a similar observation: “7d ATM IV [implied volatility] has compressed to 29.1v on BTC and 41.2v on ETH even as a binary July print lands inside the weekly window, so the term structure is declining to price the event risk that sits directly on the tape,” Laevitas said on X.
The fact that expectations remain low could be just the setup for markets to be surprised into action by a potential big beat or miss in the inflation figures. Stay alert!
