Macro: Tariffs, Rate Cuts, and the CPI Cliffhanger
Macro remains disorderly. Late last week, President Trump reignited trade tensions, announcing a fresh wave of reciprocal tariffs – including a striking 39% levy on Swiss imports. Markets responded swiftly, with both crypto and equities selling off in a classic risk-off move heading into the weekend.
Meanwhile, labour market weakness has forced a pivot in rate expectations. Last Friday’s NFP print came in at just 73,000, with a massive 258,000 downward revision to prior months. Since then, the odds of a September rate cut have jumped from 43% to over 90%. Political fallout followed swiftly – with Trump firing Labor Statistics Commissioner Erika McEntarfer, citing mistrust in the data.
Still, inflation remains the wildcard. Next week’s CPI print will likely be the swing factor – either validating the rate cut narrative or reigniting hawkish concerns if price pressures prove sticky.
On the USD front, the DXY is down 1.8% on the week, following the NFP-driven repricing. But with the USD already down approximately 10% YTD, we see growing risk of a positioning-driven short squeeze. The consensus “weaker dollar” trade – built on tariffs, fiscal expansion, and rate cuts – now looks crowded. If inflation surprises next week, that trade could unwind violently.
Elsewhere, the Bank of England cut rates by 25bps to 4%, its lowest level in over two years. While inflation is expected to peak at 4%, double the central bank’s target, the decision passed after two votes were needed for the first time ever, highlighting internal divisions and signaling that the rate-cutting path ahead may be choppy.
Crypto: ETH Takes the Lead as 401(k)s Go Crypto
Crypto markets are stabilizing after last week’s flush, with BTC trading around UUSD 116,000 and ETH leading the rebound, probing the USD 4,000 level and pushing ETH/BTC up to 0.0339 overnight. The move has been supported by continued ETF inflows, treasury accumulation, and growing conviction following the GENIUS Act, which reinforced ETH’s role as the dominant stablecoin settlement layer. On the trading side, the recent shakeout served as a reality check – a reminder that alt beta season doesn’t move in a straight line. Recent selloff triggered over USD 1 billion in liquidated longs, but major levels held – and ETH, in particular, absorbed the volatility well. Structurally, the picture remains intact, and we continue to see strong demand on dips, with the USD 3,500–USD 3,600 zone likely to act as key support.
In a move that could have long-term implications for digital assets, President Trump last night signed an executive order authorizing crypto to be included in U.S. 401(k) retirement plans – a USD 12 trillion market that has historically been limited to traditional equities and bonds.
While execution timelines remain uncertain, the policy door is now open, and this could ultimately surpass ETF flows in significance. For now, it is something to monitor as frameworks are built out over the coming months.
Looking Ahead: CPI, Consolidation, and Conviction
Next Tuesday’s CPI will be the final major input ahead of the Fed’s September meeting. A soft print may cement a rate cut. A hot one could force markets to reprice, especially in the face of crowded dollar shorts and aggressive easing bets.
But structurally, crypto remains supported by:
- ETF and treasury inflows
- 401(k) market access on the horizon
- Global liquidity and fiscal dominance
This still feels like a shakeout – not a breakdown. And with key support levels intact, and a potentially dovish macro trigger ahead, the setup into late August remains quietly constructive.
Happy Trading!
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