Green candles are back in the market today with the help of the US inflation (CPI) report that came out lower than expected. In this article, we will explore what’s next and what key indicators to look at in the future.
US Inflation and the FED
The forecast was a CPI of 3.5%, but it came out at 3.4%. This is very important because if the inflation was 3.6% or higher, it would have been a disaster since the US Federal Reserve (FED) would definitely delay the interest rate cuts.
Source : Tradingview
So, 3.4% was very surprising. It shows that inflation is going down faster than expected. Chairman of the FED, Jerome Powell, said in an interview following the FED’s decision to hold the interest rate at 5.25%-5.50%, that he plans to cut the interest rate only one time this year.
That’s fewer than the three times that were expected, but the market is taking it relatively well.
Key Indicators to Follow
The US Dollar Index (DXY) is very important to understand the power of the US dollar. It’s a representation of the US dollar against multiple currencies such as the Euro, British Pound, etc.
It’s important because if someone wants to buy US Bonds, they will need US dollars. So if you see that the US dollar is falling, you know that liquidity is heading elsewhere.
Also, we know that there is an inverse correlation (most of the time) between Bitcoin and the DXY.
S&P 500 Index
This is a stock index that is very popular and very important to follow. It shows the power of the biggest companies in the US, which are the heart of the global economy. Historically, there is a correlation between Bitcoin and the S&P because both are risk-on assets.
It’s key to understand where the money is heading. Is it in stocks? Which ones? Why? These questions will help you understand the economy and help you build your investment portfolio.
As always thank you for reading !
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Disclaimer : This is not a financial advice, you need to do your own research !
