The U.S. Bureau of Labor Statistics released the July 2025 CPI and Real Earnings reports today at 8:30 AM ET. The data came in exactly as markets expected, no hotter than expected inflation and sparking a risk-on rally across the market, while the U.S. Dollar Index (DXY) dropped sharply.
Key Data Points:
CPI (Headline): +0.3% m/m, +2.9% y/y (June was +2.7% y/y)
Core CPI (ex-food, energy): +0.2% m/m, +3.2% y/y (stable from June)
Energy: +2.1% m/m — Gasoline +3.3%
Food: +0.2% m/m
Shelter: +0.4% m/m (still the largest inflation contributor)
Real Avg Hourly Earnings: +0.1% m/m, +1.1% y/y
Real Avg Weekly Earnings: +0.3% m/m, +0.7% y/y
Market Reaction:
The release of the July 2025 CPI and Real Earnings data triggered an immediate and decisive move in financial markets. The U.S. Dollar Index (DXY) saw a sharp and rapid decline within minutes of the announcement, reflecting a shift away from safe-haven demand. This was largely because inflation came in exactly as expected, avoiding the “hot” surprise that could have reignited fears of further aggressive Fed action. Equity futures jumped, and crypto markets reacted almost instantly, with BTC, ETH, and SOL showing strong green candles on the 1-hour chart.
The drop in DXY removed a major headwind for risk assets, as a weaker dollar often correlates with stronger performance in crypto. The reaction also suggests that traders were positioned defensively ahead of the release and quickly moved capital back into higher-risk assets when no negative surprise was observed.
The post-CPI order flow also hints that macro traders are linking USD weakness directly to crypto strength in this environment. While the momentum is positive in the short term, it’s worth noting that the Fed will remain cautious, especially with shelter inflation still contributing heavily to the overall CPI.
Currently BTC is moving around $119,900 (~1.2% since CPI release) while ETH, SOL, XRP, BNB are 3.74%, 3.22%, 1.55% and 2.41% respectively at the time of writing.