The U.S. Bureau of Economic Analysis is set to announce the personal consumption expenditures (PCE) inflation data for November today. The annual rate of PCE inflation is expected to further decelerate to 2.8%, down from 3% last month, with no change in the monthly rate. In addition, the Core PCE, the Federal Reserve’s preferred measure of inflation, is predicted to increase 0.2% month-on-month while the annual rate is likely to dip to 3.3%, marking its lowest level since 2021.
Market analysts’ estimates are in line with the market consensus, following Fed Chairman Jerome Powell’s forecast of three rate cuts in 2024. The odds of the Fed beginning rate cuts in March currently stand at 45%, while the CME FedWatch shows a 71% probability of a 25 basis point rate cut in March.
The outlook of the monetary policy remains dovish as the US Dollar Index (DXY) steadied around 101.8 on Friday, but is still set to decline for the second consecutive week in expectation of the Fed rate cuts. Additionally, the US 10-year Treasury yield has been decreasing after dropping below 4% last week, and is currently at 3.89%, slightly up as traders brace for the inflation data.
The Fed rate cuts and other macroeconomic factors suggest a stronger recovery in the Bitcoin and crypto market. Investors and traders are also taking into account the potential approval of spot Bitcoin ETFs and the Bitcoin halving, which could trigger a major bullish rally.
Today, Bitcoin, Ethereum, and top altcoins such as Solana (SOL), BNB, XRP, Cardano (ADA), Avalanche (AVAX) and others are up, as investors anticipate a Santa Claus rally. BTC price is up 1% in the last 24 hours, trading above $44,000, with its trading volume declining 18%. During the same period, the BTC price has reached a low of $43,387 and a high of $44,367. However, profit taking is possible due to the expiry of 25,000 BTC options of a notional value of $1.11 billion with a put call ratio of 0.70, and a max pain point of $42,000. Additionally, 217,000 ETH options of a notional value of $490 million are due to expire, exhibiting a put call ratio of 0.60 and a max pain point of $2,200.
