US CPI data 1330 GMT to set tone
May impact Fed rate cut bets
Bitcoin near twoyear high after ETF approval
Weak wages weigh down yen

LONDON, Jan 11 Reuters The dollar drifted lower on Thursday as traders waited for U.S. inflation data to confirm whether bets on as many as five Fed interest rate cuts this year were justified, while weak Japanese wages data sent the yen to a sixweek low against the euro.

Bitcoin traded at 46,400, just shy of a twoyear high, with investors welcoming the muchanticipated U.S. approval of spot bitcoin exchangetraded funds.

The approval opens the way for institutional buying and had been priced in over recent months, driving the cryptocurrency up 70 since midOctober.

The main event for the currency market on Thursday is monthly U.S. consumer inflation, which economists expected to have slowed again in December.

The dollar has slid in recent weeks, as investors have become increasingly convinced the Federal Reserve could start cutting rates as early as March an expectation many in the market see as excessive.

Its a bit like an errant school child runs away with itself and gets carried away and needs to be reined in as the data comes out, CMC Markets chief markets strategist Michael Hewson said.

For me, the market is thinking way too far ahead. Yes, rate cuts are coming, that is pretty much a given. But do I really think the Fed is going to cut rates in March, unless there is a problem in the banking sector or the commercial real…