Ether jumped following the release of cooler-than-expected U.S. consumer price inflation data, as traders positioned for a lower probability of near-term interest rate increases from the Federal Reserve.
The Consumer Price Index rose 2.9 percent year-over-year in June, below economist forecasts and the prior month's 3.0 percent reading, according to the Bureau of Labor Statistics. The softer print prompted equity and crypto markets to rally on expectations that the Fed may hold rates steady or begin cutting later in the year.
Ether traded higher in the hours following the announcement. Trading volume on major exchanges accelerated during the period, with activity concentrated on Binance, according to a post from CryptoQuant, a blockchain analytics firm.
Lower inflation readings typically reduce expectations for higher borrowing costs, which can support demand for assets that offer no yield and are sensitive to real interest rates. Bitcoin and other altcoins also moved higher in the hours after the CPI release.
Traders monitor inflation data closely as input into rate-path expectations, which influence capital allocation across risk assets including digital currencies.
The next major inflation reading is scheduled for July, with the Fed's rate decision expected in late July.
