Focus of the Month

The US CPI monthly rate is about to be announced tonight at 8:30 PM. Before the announcement, let's take a look at the changes in the financial market and the investment bets on the trend. Often, there will be movements before takeoff. This article will use overall financial market data to predict the announcement of the CPI monthly rate.

Market Movements

The US dollar index began to plunge significantly last night, retracting from the 104.9 level to a low of 104.5, and then started to recover during the day session, forming a double bottom pattern on the hourly chart. Due to the excessive issuance of trillions of US dollars during the US epidemic, global inflation has risen, and the economy has entered a recession. The major exchange rate against the euro has continued to decline. Yesterday, it began to rebound. Why did the US dollar decline yesterday? Mainly due to the decrease in the UK unemployment rate, the news that the Bank of Japan will intervene to devalue the yen, the rebound of the European economy, and the decrease in Reuters' expectations for US bonds, leading to the withdrawal of funds from the US dollar and US bonds. The Nasdaq index and the S&P index fell, benefiting high-risk assets such as Bitcoin.

We mentioned the excessive issuance of trillions of US dollars. With the US dollar as the global reserve currency, this behavior is undoubtedly a major blow to countries that use the US dollar as a common currency or hold a large amount of US dollar reserves. The appearance of this event will undoubtedly shake the dominant position of the US dollar. The subsequent interest rate hike is on one hand to strengthen the value of the US dollar, and on the other hand, to harvest the global economy. However, the sustained high interest rates will lead to an increase in the US fiscal deficit and bank "deficits." This is the main reason why the five major rating agencies, except for the two domestic rating agencies in the US, have downgraded the credit ratings of the US fiscal and its banks.

Taking a comprehensive look at the current macroeconomic situation, the recent data released by the US, the non-farm employment data has increased, the unemployment rate has risen (coordinated with the end of the strike by auto workers), the PMI manufacturing data has increased, the service industry PMI has slightly decreased, and the initial jobless claims have decreased. The US dollar index has recovered from its decline and is currently stable at around 104.8. From various data, it can be seen that the current rebound of the US economy is still ongoing. The US CPI non-seasonally adjusted annual rate, from the historical trend, the announced value in June was 3%, and after a 25 basis point interest rate hike in July, the announced value was 3.2%. After the interest rate hike, inflation rose, so for the economic data in August, it is undoubtedly on the rise. The market's bet on the annual CPI rate is also higher than the previous forecast of 3.6%. From various data, it is certain that the announced value will be higher than the previous value. Looking at the higher speed of inflation in August compared to July, the increase in the annual CPI rate will exceed that of July. It is expected to be in the range of 3.6%-3.7%. If it is 3.6, it will have some pressure on the cryptocurrency market, but not too much. If it exceeds expectations, it will cause significant suppression on Bitcoin. Therefore, our logical point of betting is mainly on the bearish side.

The current price of Bitcoin is running near 26100 points. The top of the hourly chart has shown a reversal signal of a dark cloud cover. The bottom support of the dense chip area ahead is at the 25800 level. The MACD fast and slow lines are running above the zero axis, with the fast line sticking together. Although there is a crossover, it has not opened up, and the second golden cross has not been confirmed. If the Bitcoin price line can stabilize above the 26300 level, a second golden cross rebound can be opened. Therefore, our operation will focus on shorting at the current price with 26300 as the defensive line, betting on the rise of CPI, and looking at the first support at 25700 points and the second target at 25000 points. Compared to Bitcoin, Ethereum's trend is weaker, so the operation can be more aggressive. Short at the current price, defend at the 1630 level, and look at the 1560-1530 level.

Translated with www.DeepL.com/Translator (free version)

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