Bitcoin Retakes $67K, Dollar Index Rally Stalls as Beige Book Supports Fed Rate Cuts

[25/10/2024]
- Beige Book bolsters hope for quarter-point Fed rate cuts in November and December. - Beige Book bolsters hope for quarter-point Fed rate cuts in November and December. - The rally in the DXY stalled after the Beige Book report, paving the way for BTC recovery.

Bitcoin (BTC) has climbed back above $67,000 following the Federal Reserve's (Fed) release of its latest Beige Book report on U.S. economic conditions on Wednesday. The report portrayed a subdued economic outlook, strengthening the case for further rate cuts in the coming months.

In the latest edition, nine out of twelve regional banks reported stagnant or slightly weaker economic activity since early September. Most regions saw a decline in manufacturing activity, with some signs of moderation in consumer demand. Inflation, or the cost of living, continued to moderate as selling prices increased only slightly or modestly across most districts. Employment rose slightly, but hiring primarily focused on replacement rather than growth. Several districts also reported slower wage increases. Overall, this sluggish outlook contradicts the stronger-than-expected September jobs report, opening the door for further rate cuts by the Fed.

Bitcoin has recovered from overnight lows under $65,200 and is now trading 1% higher at $67,300. Meanwhile, the U.S. dollar index (DXY) rally has stalled, with the index pulling back to 104.30 from an overnight high of 104.57, according to TradingView data.

ForexLive noted that the Beige Book comments caught the market's attention and reinforced expectations for a 25-basis-point rate cut in November, with a high likelihood of another cut in December. The dollar turned weaker across the board afterward.

Several Fed officials, including Chairman Jerome Powell, cited the Beige Book's subdued outlook as one of the reasons for cutting the benchmark interest rate by 50 basis points to the 4.75%-5% range in September.

Markets were quick to price in an additional 75 basis points of easing before the end of the year. However, these expectations were tempered by upbeat September jobs data and a hotter-than-expected inflation report for the month.

8:10 UTC: Corrects the overnight low to $65,200.

Theo COINDESK