WASHINGTON (dpa-AFX) - Mixed sentiment prevails as world markets brace for the Fed's interest rate decision to be announced on Wednesday afternoon. Despite strong rate cut expectations, the six-currency Dollar Index has firmed up a little less than quarter percent. Gold has slipped more than half a percent. At the same time, the aggregate market capitalization of cryptocurrencies has increased more than half a percent in the past 24 hours.
The six-currency Dollar Index is currently trading 0.15 percent higher at 96.78 versus 96.63 at the previous close. The day's trading has ranged between 96.69 and 96.84. Gold Futures for December settlement has slipped 0.64 percent overnight to $3,701.42 per troy ounce.
Wall Street Futures are directionless while bond yields have eased across tenors and regions.
With markets overwhelmingly expecting a quarter percentage rate cut, the spotlight has shifted to the Fed's guidance as well as the Summary of Economic Projections.
In the Summary of Economic Projections made in June, the Fed had lowered the GDP growth projection for 2025 to 1.4 percent from 1.7 percent made in March. Subsequent data releases have revealed that the U.S. economy grew at an annualized rate of 3.3 percent in the second quarter versus the 0.5 percent contraction in the first quarter.
In June, the Fed had raised the unemployment rate projection for 2025 to 4.5 percent from 4.4 percent projected in March. The unemployment rate which was 4.1 percent in June has since increased to 4.2 percent in July and 4.3 percent in August. With markets expecting the weakness in the labor market rate to goad the Fed towards monetary easing, the Fed's new projection in this regard would be keenly watched.
In the June projections, the Fed anticipated PCE inflation to rise to 3 percent in 2025 from 2.7 percent projected earlier. Latest data releases showed that PCE prices in the U.S. increased 2.6 percent year-on-year in July as well as June and 2.4 percent in May. Amidst renewed concerns about the impact of the increased tariffs on prices, the Fed's forward inflation projection assumes significance.
Given the fact that cryptocurrencies are non-interest bearing and the reduction in the opportunity cost of holding cryptocurrencies that a rate cut entails, crypto markets would also be keenly looking out for the Fed's projection about the appropriate policy path. In the projections made in June, the Fed had anticipated the Federal funds rate to fall to 3.9 percent in 2025, implying two more rate cuts in 2025.
Amidst strong expectations that the Fed would pivot to a dovish stance, crypto markets are trading firmly above the flatline. Aggregate crypto market capitalization has increased 0.57 percent overnight to $4.03 trillion. While 15 of the top 100 cryptocurrencies are trading with overnight gains of more than a percent, 25 are trading with overnight losses of more than a percent.
Bitcoin is currently trading at $116,353.25 recording overnight gains of 0.88 percent. Bitcoin has gained 3.6 percent in the past week, 1.03 percent in the past month and 24.6 percent till date in 2025. BTC had ranged between $117,329 and $114,813 in the past 24 hours. The cryptocurrency is currently trading about 7 percent below the all-time-high of $124,457.12 recorded on August 14.
Ethereum edged down 0.37 percent overnight to trade at $4,483.72. Ether's current trading price is 9 percent below its all-time-high. The 24-hour trading range was between $4,554.5 and $4,428.3.
3rd ranked XRP also slipped 0.38 percent overnight to trade at $3.01, around 22 percent below the all-time high.
5th ranked BNB gained 2.9 percent overnight at its current trading price of $953.16. BNB touched a fresh all-time high of $962.29 in the past 24 hours.
The price of 6th ranked Solana decreased 0.58 percent overnight to $234.17.
8th ranked Dogecoin added 0.27 percent overnight and is currently changing hands at $0.2649. With losses of more than 16 percent, DOGE is the highest-ranking crypto to trade with losses over the year-to-date horizon.
TRON ranked 9th overall lost 1.2 percent overnight and is currently changing hands at $0.3415.
10th ranked Cardano added 0.28 percent overnight to trade at $0.8719.
50th ranked MYX Finance (MYX) topped overnight gains among the top 100 cryptocurrencies with a gain of more than 52 percent.
50th ranked Monero (XMR) topped overnight losses among the top 100 cryptocurrencies with a decline of 6.2 percent.
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