Dollar gains on yen, bitcoin muted after SEC approves ETFs

NEW YORK, Jan 10 – The dollar gained on the yen but dipped against the euro on Wednesday as investors waited on US inflation data for fresh clues on when the Federal Reserve is likely to begin cutting interest rates.

In cryptocurrencies, bitcoin seesawed in a range after news that the Securities and Exchange Commission (SEC) finally approved 11 spot bitcoin exchange-traded funds. It was last down 1.5% at 45,441.

There was some uncertainty about whether the SEC had finalized approval, a day after
a social media message on the SEC’s account claimed the regulator had approved bitcoin exchange traded funds (ETFs), but was later revealed to have been made by an unauthorized person.

After about 40 minutes of confusion about what looked like an official announcement by the SEC, the agency confirmed approved applications, including from BlackRock, Ark Investments and 21Shares, Fidelity, Invesco, and VanEck, among others, according to a notice on its website. Some products are expected to begin trading as early as Thursday.

The dollar index has held in a tight range since Friday when it was volatile, initially jumping on data showing strong jobs gains in December, before dropping on some soft underlying details of the employment report.

The dollar weakened further on Friday after a report by the Institute for Supply Management (ISM) also showed the US services sector slowed considerably in December.

This week’s consolidation “was somewhat predictable in the sense that we have these huge gyrations last Friday on the back of the jobs data and the soft ISM,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York.

The Consumer Price Index (CPI) due out on Thursday is the next likely driver of dollar direction. It is expected to show that headline inflation rose 0.2% in the month and by 3.2% on an annual basis.

Traders are pricing for the likelihood that the Fed will begin cutting rates in March as inflation eases back closer to the US central bank’s 2% target. But with aggressive rate cut bets already baked into prices, the dollar is holding above five-month lows reached in late December.

The dollar index was last down 0.14% at 102.36. The euro gained 0.36% to USD 1.09700.

The greenback rose 0.84% to 145.68 yen.

Soft economic data this week in Japan may make it less likely that the Bank of Japan will raise rates out of negative territory this month.

“A vocal minority were talking about a rate hike at the end of this month when the Bank of Japan meets, but I think that people feel more comfortable with an April move,” Chandler said.

Data on Wednesday showed that Japanese workers’ real wages kept shrinking for the 20th month in November. Core inflation in Japan’s capital also slowed for the second straight month in December as cost-push price pressures continued to ease, data showed on Tuesday.

In crypto, bitcoin was last up 0.64% at USD 46,438. It briefly hit a 21-month high of USD 47,897 on Tuesday after the post that the SEC blamed on a hack.

Anticipation of a positive SEC decision on ETFs, which is likely to draw billions of dollars in new investments, has boosted bitcoin prices in the past two months.

“The reality is most who have followed the saga have moved on and the green light from the SEC is fully priced,” said Chris Weston, head of research at Pepperstone.

Ethereum also reached USD 2,483, the highest since May 2022, and was last up 5.19% at USD 2,468.

(Reporting By Karen Brettell; additional reporting by Alden Bentley in New York and Joice Alves in London; editing by Jonathan Oatis, Will Dunham, and Marguerita Choy)