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Daily brief: Bitcoin prices plummet against CPI-charged USD as Asia-Pacific traders brace for impact

Asia-Pacific markets set for higher open on broad US dollar softness; Wall Street plunge is likely to drag on Asia-Pacific markets today and BTC/USD’s technical posture points to more losses after a big drop.

Wednesday’s Asia-Pacific outlook

Asia-Pacific markets are set to fall after market sentiment soured overnight during New York trading. A surprisingly strong US consumer price index (CPI) print for August sent short Treasury yields higher, which charged the US dollar. The high-beta Nasdaq-100 Index (NDX) fell 5.54%, its worst daily percentage decline of the year.

The Dow Jones Industrial Average lost 3.94%. US CPI rose 0.1% from last month and 8.3% on an annual basis. That was higher than the estimated 0.0% and 8.1% increases. While the headline rate eased from 8.5%, core inflation—a gauge that strips out food and energy prices—rose 0.6% from July.

The US 2-year rate increased as much as 20 basis points during New York trading. That pushed the 10-year/2-year yield spread, a closely-followed recession predictor, to its deepest inversion since August. The safe-haven US dollar rose against its major peers. The Aussie dollar and Kiwi dollar were two of the biggest losers. The euro and British pound were also sharply lower, although comparatively better than their APAC peers.

Gold and silver prices moved lower. XAG/USD came under heavier selling pressure, although it remains up this week after a big move on Monday. Overnight index swaps show a 35% chance for a 100-basis point rate increase at the September 22 FOMC policy announcement after the CPI print. The risk-sensitive cryptocurrency space was another victim of the risk-off move. Bitcoin fell around 10%, and Ethereum dropped over 7%. Ethereum's network "merge" is almost here, with just over 28 hours to go, according to the Google countdown widget.

New Zealand’s second-quarter gross domestic product (GDP) growth rate offers event risk for tomorrow. However, today's docket is light, with Japanese machinery orders for July and the Reuters Tankan Index for September scheduled to hit the wires. New Zealand GDP is seen rising at 1% on a q/q basis. Later today, Hong Kong’s second-quarter industrial production update will wrap up the day.

US accountants could arrive in Hong Kong over the next couple of days, according to a Bloomberg report. It is unclear if the Public Company Accounting Oversight Board’s auditors will be permitted to sidestep quarantine rules, which would delay the start of work by a few days. Alibaba will be one of the first to hand over its financial statements, although certainty over how that process will proceed is also uncertain.

BTC/USD technical outlook

Bitcoin prices plummeted around 10% on Tuesday, trimming almost all of its September gains. The falling 100-day Simple Moving Average proved too much for BTC as the SMA did back in mid-August. Prices fell through the 61.8% Fibonacci retracement and the 20-day SMA before moderating around 20,280.

The Relative Strength Index (RSI) fell below its midpoint, while the MACD turned lower toward its signal line. Those oscillators support the case for further losses in the days ahead. The 78.6% Fib sits just above the upper range of a support zone that has been in play since June. A break lower would expose prices to levels not traded since 2020.

BTC/USD daily chart

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