Bitcoin rose 2.5% on Wednesday on track for the third profit in a row, hitting one-week highs and about to trade above $60,000 amid a positive market sentiment. 

US 10-year treasury yields lost ground as markets await the second half of Fed Chair Jerome Powell’s Congressional testimony.

Prices

Bitcoin rose 2.5% today to $59,459 at Bitstamp, the highest since July 4, with a session-low at $57,357. 

Bitcoin rose 2.3% on Tuesday away from five-month lows at $53,550. 

‏Crypto Market Value 

The market value of cryptocurrencies rose by $45 billion on Wednesday to a total of $2.280 trillion as both ethereum and bitcoin rebounded. 

US Yields 

US 10-year treasury yields fell 0.8% today, almost hitting two-week lows at 4.265%, in turn boosting risk appetite. 

During the first half of Fed Chair Jerome Powell’s Congressional testimony, he said a rate cut wouldn’t be appropriate until the Fed gains confidence that inflation is heading towards 2%.

Powell added that inflation has improved in recent years, and that more good data will pave the way for a flexible monetary policy. 

Powell will present the second half of his testimony today ahead of the House of Representatives. 

The dollar declined in European trade on Wednesday against a basket of major rivals, resuming losses and approaching four-week lows again as US 10-year treasury yields taper off. 

Fed Chair Jerome Powell took a cautious stance on the timing of the next interest rate cut during the first part of his Congressional testimony, with investors awaiting the second part later today.

Markets also await crucial US inflation data later this week, which will provide clues on the likely path ahead for interest rates.

The Index

The dollar index fell 0.1% today to 105.05, with a session-high at 105.17.

The index closed up 0.1% on Tuesday, the second profit in a row away from four-week lows at 104.80.

The dollar rebounded after somewhat bullish remarks from Fed Chair Powell

US Yields

US 10-year treasury yields fell 0.5% on Wednesday, resuming losses and heaping pressure on the greenback.

Powell 

During the first half of Fed Chair Jerome Powell’s Congressional testimony, he said a rate cut wouldn’t be appropriate until the Fed gains confidence that inflation is heading towards 2%.

Powell added that inflation has improved in recent years, and that more good data will pave the way for a flexible monetary policy. 

Powell will present the second half of his testimony today ahead of the House of Representatives. 

US Rates

According to the Fedwatch tool, the odds of a 0.25% US interest rate cut fell to 73% following Powell’s remarks, while the odds of a November cut fell to 85%. 

Now traders await important US consumer and producer prices data this week. 

Euro rose in European trade on Wednesday, resuming gains against the dollar after a two-day hiatus and approaching four-week highs once more as markets focus on fundamentals away from France’s political situation.

The likelihood of an ECB interest rate cut next week remains week, while the odds are increasing of multiple Federal Reserve rate cuts this year.

The Price 

The EUR/USD pair rose 0.1% today to $1.0852, with a session-low at $1.0810.

The pair lost 0.1% on Tuesday away from four-week highs at $1.0845. 

The dollar notched up some gains yesterday after somewhat bullish remarks by Fed Chair Powell. 

European Rates

Recent remarks by European Central Bank officials, in addition to eurozone inflation data, hurt the odds of an ECB rate cut in July. 

ECB President Christine Lagarde recently said that the bank needs more time to confirm that inflation is moving towards the 2% target before taking a decision on cutting rates. 

The ECB cut rates in June for the first time since 2016 after a long wave of rate hikes, but refrained from any further moves since then.

US Rates

The markets are pricing in a 73% chance of a Federal Reserve rate cut in September, and an 85% chance of such a cut in November. 

Now investors await Fed Chair Jerome Powell’s second part of his Congressional testimony later today to gather more clues on the future of US interest rates.

Rate Gap

The interest rate gap between the US and Europe is currently standing at 125 basis points in favor of the US, and will likely shrink in September. 

The New Zealand dollar fell in Asian trade on Wednesday against a basket of major rivals, resuming losses against the US dollar and becoming the worst performing major currency.

The Reserve Bank of New Zealand voted to hold interest rates unchanged at 15-year highs. 

And for the first time, the central bank took a decisively bearish stance on inflation and monetary policies in the months to come, boosting the odds of a 0.25% rate cut in August.

The Price

The NZD/USD pair fell 0.85% today to 0.6075, with a session-high at 0.6132.

The pair closed Tuesday flat after losing 0.3% on Monday off four-week highs at 61.54 cents. 

Losing Currencies

The kiwi became the worst G8 performing currency today, with a 0.85% drop against the US dollar, and a 0.9% fall against the pound.

It fell 0.8% against the franc, hitting two-week lows, and 0.7% against the yen. 

It also marked a 0.8% loss against its Canadian counterpart, and fell 0.9% against its Australian counterpart to a two-year low. 

RBNZ 

The Reserve Bank of New Zealand held interest rates flat at 5.5%, the highest since October 2008.

However, the bank opened the way for policy easing as time went on and inflation retreated. 

The RBNZ said it expects main inflation to hit the 1-3% target in the second half of the year. 

The bank has raised interest rates by nearly 525 basis points since October 2021 to control inflation rates that were at 1999 highs.

However, such aggressive policy tightening slowed the economy considerably and sent it into recession in late 2023. 

New Zealand Rates

Following the remarkable change of tone by the RBNZ, analysts now estimate a 40% chance of a 0.25% rate cut in August, and an 80% chance of such a cut in November.