Daily News Analysis By Ultima Markets

[Ultima markets]

US CPI remained stable in July, but core inflation rose to a six-month high! Betting on a September rate cut heats up, and the dollar weakens​

The latest US Consumer Price Index (CPI) data for July presented mixed signals. While the headline CPI remained stable at 2.7% year-over-year, in line with market expectations for contained inflation, core inflation, excluding food and energy, unexpectedly accelerated, jumping to 3.1% year-over-year, the largest annual increase in six months. This data boosted market optimism that the Federal Reserve (Fed) will cut interest rates in September, contributing to a weakening of the US dollar and pushing US stocks to new record highs.

The dual signals behind the data: Inflation is controllable vs. core stubbornness​

• Overall inflation remained stable, with energy and food prices declining : The overall CPI rose by 2.7% year-on-year in July, slightly below market expectations. This was mainly due to falling energy prices, including a 2.2% drop in gasoline prices in July, while annual food inflation remained at 2.9%.
• Core inflation accelerated, with service prices being the main driver : The annual core inflation rate jumped from 2.9% to 3.1%, the fastest pace in six months. The increase was mainly driven by service prices, including sharp increases in airfare, medical care, and housing.

Market reaction: Over 90% of bets on a September rate cut push the stock market to a new high​

The data, which showed inflation was under control but stubborn at its core, temporarily eased market concerns about stagflation and strengthened risk appetite. Wall Street reacted positively:

• Stocks : The S&P 500 and Nasdaq both hit record highs, while the Dow Jones also posted gains.
• Rate cut expectations : According to CME FedWatch data, the interest rate swap market is currently betting that the probability of the Federal Reserve cutting interest rates by 25 basis points in September has exceeded 90%, and it is expected that there may be as many as three cumulative rate cuts in 2025.
• Probability of a rate cut at the Federal Reserve meeting

Image Credit: Source: CME Group

The US dollar weakens, and technical analysis focuses on key support​

Compared with the strong performance of the stock market, the US dollar weakened as the market increased its bets on the Federal Reserve's easing. The US dollar index (USDX) fell below 98, but remained above the recent low of around 97.80.

Image source: US Dollar Index (USDX) daily chart | Source: Ultima Market MT5

If the US dollar index clearly falls below 97.80, it may open up further downward space; on the contrary, if this level can provide solid support, the US dollar still has a chance to stabilize.

Follow-up observation: Producer Price Index (PPI) and the impact of tariffs​

While the CPI data provided a brief boost of optimism, stubborn core inflation remains a concern. Market attention will next turn to Thursday's Producer Price Index (PPI) data, which will provide clearer insights into how the new tariffs are transmitting to US inflation. A cooling PPI reading could further support stocks and weaken the dollar; a strong reading could reverse market optimism surrounding a Federal Reserve rate cut.

Risk Warning: Leveraged derivatives are complex and come with a high risk of losing capital rapidly due to the leverage effect. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your capital.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein is for informational purposes only and is intended to help readers understand market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy, and it is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.

 

[Ultima markets]

US CPI data boosts markets, interest rate cut expectations surge: dollar retreats, Bitcoin soars to record high​

Expectations of a Federal Reserve (Fed) rate cut surged significantly after the July U.S. Consumer Price Index (CPI) data came in below expectations, driving a broad rally in global risk assets. The U.S. dollar index (DXY) fell to 97.70, its lowest level since late July. Meanwhile, Bitcoin surged to a new all-time high, signaling a sharp shift in market sentiment.

Expectations of interest rate cuts rise, with both stock and bond markets rising​

Driven by shifting market sentiment, global stock markets rallied sharply, led by the US market. Both the S&P 500 and Nasdaq indices hit new highs, while US Treasury yields declined in response. Market consensus currently places the probability of a 25 basis point Federal Reserve rate cut in September at approximately 94%, with some investors even betting on a larger cut or three cuts this year.

The Japanese yen also benefited, rebounding sharply against the US dollar and other major currencies on Thursday morning, mainly because the market believed that the US-Japan interest rate gap would narrow.

Bitcoin hits record high, crypto market heats up​

Bitcoin climbed above $124,000, a new all-time high, amid improving risk appetite and potential easing monetary policy. Ethereum also surged, approaching its highest level since November 2021.

Ultima Market analyst Shawn pointed out that the rise of cryptocurrencies benefited from optimism about the Federal Reserve's interest rate cuts, strong institutional buying, and Trump's friendly stance on crypto regulation.

• Bitcoin daily chart

Image Credit: BTCUSD, Daily Chart | Source: Ultima Market MT5

Shawn mentioned in his technical analysis report that Bitcoin may still have room to rise, and the next target price may be around the $130,000-131,000 range. However, he also emphasized that the specific trend will depend on market sentiment, especially the reaction after the release of the US Producer Price Index (PPI) on Thursday.

What will the market focus on next?​

• U.S. Producer Price Index (PPI) : Thursday's PPI data will reveal whether upstream price pressures are easing or accumulating, which will be an important signal for future Federal Reserve policies.
• Cryptocurrency Updates : Investors will be watching to see if Bitcoin can sustain its upward momentum around $125,000.
• Political pressure : U.S. Treasury Secretary Scott Bessent and President Trump are continuing to pressure the Federal Reserve to take more aggressive action to cut interest rates.

Risk Warning: Leveraged derivatives are complex and come with a high risk of losing capital rapidly due to the leverage effect. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your capital.

Disclaimer​

The commentary, news, research, analysis, prices, and other information contained herein is for informational purposes only and is intended to help readers understand market conditions. It does not constitute investment advice. Ultima Markets has taken reasonable steps to ensure the accuracy of this information, but cannot guarantee its absolute accuracy, and it is subject to change without notice. Ultima Markets assumes no liability for any loss or damage (including, but not limited to, lost profit) arising directly or indirectly from the use of or reliance on such information.