U.S. CPI inflation slows to 3.4% as expected, bitcoin holds near $64,000

In July, U.S. inflation remained consistent with expectations, leaving the Federal Reserve's decision on interest rates unchanged. The Consumer Price Index (CPI) increased by 0.1% from June, matching economists' predictions and slightly falling from the 3.5% rise in June. Year-over-year, CPI grew by 3.4%, aligning with forecasts and being a touch lower than June's 3.5%.

Core CPI, which excludes food and energy costs, rose by 0.2% from July, as forecasted, and edged down from June's 2.6% figure. On a year-over-year basis, core CPI also rose by 2.5%, as anticipated.

Bitcoin temporarily dropped from $64,400 to $64,080 before stabilizing near $64,000, showing minimal movement over 24 hours. Nasdaq 100 futures rose by 0.7%. Treasury yields remained subdued, maintaining their downward trend from before the CPI report. The two-year yield fell to 4.19%, down 3.6 basis points, while the 10-year yield decreased to 4.66%, also down 3 basis points.

The July CPI report gained extra significance following a weaker-than-anticipated U.S. employment report, which revealed a surprising job loss of 23,000 in July. Daniela Hathorn, a senior market analyst at Capital.com, noted that the lack of an unexpected inflation spike removed one of the most significant immediate risks to risk assets, though the report might not be strong enough to prompt a major shift in market sentiment.

Currently, market participants are pricing in a 44% chance of a Federal Reserve interest rate hike at their upcoming September meeting, down from 48% before the inflation report, as per the CME FedWatch Tool. A week prior, traders had a 54% probability of a September rate hike.