(Updates headline and prices at 1300 GMT; add news and comments)
By Joice Alves and Ankur Banerjee
LONDON/SINGAPORE, Jan 10 (Reuters) - The dollar steadied on Wednesday in cautious trading as investors awaited U.S. inflation data later this week, while bitcoin fell after U.S. securities regulator said a social media message posted on its account was fake.
The Securities and Exchange Commission (SEC) said someone briefly accessed its X social media account and posted a false message saying it had approved exchange traded funds (ETFs) for bitcoin, a move eagerly awaited by the crypto industry.
The SEC will decide later in the day whether to approve an application from asset managers Ark Investments and 21Shares to launch a spot bitcoin ETF. More than a dozen bitcoin ETF applications, including from BlackRock, Fidelity and VanEck, are also pending with the agency.
Bitcoin slid 3.3% to $44,600 after surging to a 21-month peak of $47,897 on the fake post.
Anticipation of a positive SEC decision on ETFs, which is likely to draw billions 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.
In the meantime, the dollar index, which measures the U.S. currency against six rivals, flattened at 102.49, after gaining 0.215% on Tuesday.
The index is up 1% this month, after dropping 2% in December as traders reassess how steep and early the rate cuts from the Fed are likely to be.
In December, the Fed surprisingly projecting 75 basis points (bps) of rate cuts in 2024, turbo-charged market expectations of easing with traders last month anticipating as much as 160 bps of cuts. Markets are currently pricing in 140 bps of cuts this year.
Traders are now focused on the release of the U.S. consumer price index report on Thursday. The report is expected to show headline inflation rose 0.2% in the month and by 3.2% on an annual basis.
"The consolidation in U.S. yields prevents a further selloff in the greenback before more clarity on inflation," said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.
"The higher shipping costs due to Red Sea tensions may not show in the December data, hence we may not see the Fed doves take a break this week."
Recent attacks from Yemen-based Houthis in the Red Sea have disrupted international commerce on the key route between Europe and Asia, as the three-month-long war between Israel and Hamas in Gaza spills over into other parts of the Middle East.