Dollar gains on yen, bitcoin muted after SEC approves ETFs
Reuters
Published Jan 09, 2024 09:01PM ET
Updated Jan 10, 2024 05:53PM ET
By Karen Brettell
NEW YORK (Reuters) -The dollar gained on the yen but dipped against the euro on Wednesday as investors waited on U.S. inflation data for fresh clues on when the Federal Reserve is likely to begin cutting interest rates.
In cryptocurrencies, bitcoin seesawed in a range after news that Securities and Exchange Commission (SEC) finally approved 11 spot bitcoin exchange-traded funds. It was last down 1.5% at 45,441.
There was some uncertainty about whether the SEC had finalized approval, a day after a social media message on the SEC's account claimed the regulator had approved bitcoin exchange traded funds (ETFs), but was later revealed to have been made by an unauthorized person.
After about 40 minutes of confusion about what looked like an official announcement by the SEC, the agency confirmed approved applications, including from BlackRock (NYSE:BLK), Ark Investments and 21Shares, Fidelity, Invesco, and VanEck, among others, according to a notice on its website. Some products are expected to begin trading as early as Thursday.
The dollar index has held in a tight range since Friday when it was volatile, initially jumping on data showing strong jobs gains in December, before dropping on some soft underlying details of the employment report.
The dollar weakened further on Friday after a report by the Institute for Supply Management (ISM) also showed the U.S. services sector slowed considerably in December.
This week's consolidation "was somewhat predictable in the sense that we have these huge gyrations last Friday on the back of the jobs data and the soft ISM," said Marc Chandler, chief market strategist at Bannockburn Forex in New York.
The Consumer Price Index (CPI) due out on Thursday is the next likely driver of dollar direction. It is expected to show that headline inflation rose 0.2% in the month and by 3.2% on an annual basis.,
Traders are pricing for the likelihood that the Fed will begin cutting rates in March as inflation eases back closer to the U.S. central bank's 2% target. But with aggressive rate cut bets already baked into prices, the dollar is holding above five-month lows reached in late December.
The dollar index was last down 0.14% at 102.36. The euro gained 0.36% to $1.09700.
The greenback rose 0.84% to 145.68 yen.
Soft economic data this week in Japan may make it less likely that the Bank of Japan will raise rates out of negative territory this month.
"A vocal minority were talking about a rate hike at the end of this month when the Bank of Japan meets, but I think that people feel more comfortable with an April move," Chandler said.
Data on Wednesday showed that Japanese workers' real wages kept shrinking for a 20th month in November. Core inflation in Japan's capital also slowed for the second straight month in December as cost-push price pressures continued to ease, data showed on Tuesday.
Get The News You Want
In crypto, bitcoin was last up 0.64% at $46,438. It briefly hit a 21-month high of $47,897 on Tuesday after the post that the SEC blamed on a hack.
Anticipation of a positive SEC decision on ETFs, which is likely to draw billions of dollars in new investments, has boosted bitcoin prices in the past two months.
"The reality is most who have followed the saga have moved on and the green light from the SEC is fully priced," said Chris Weston, head of research at Pepperstone.
Ethereum also reached $2,483, the highest since May 2022, and was last up 5.19% at $2,468.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.