Last week brought significant losses for crypto markets, which continued into the weekend. Employment data from the US failed to prevent losses on stock markets, and this week will be heavy on inflation data and jobless claims reports.
Economic Events from Sept. 9-13
Wednesday will see August's Consumer Price Index (CPI) report, which is one of two key inflation indicators used by the central bank. The data reflects price trends in the economy and shapes consumer spending, so it is closely watched by Fed policymakers as it will impact rate decisions. The August Producer Price Index (PPI) report will be released on Thursday, reflecting input prices for producers and manufacturers. This indicator is also a pre-indicator of inflationary pressures as it measures the costs of producing consumer goods, making it a leading indicator for the following month’s CPI report. Thursday will also see initial jobless claims data, providing a broader picture of the labor market.
Crypto Market Outlook
Theoretically, a larger rate cut would be good for crypto markets, but even that doesn’t appear to be enough to shake off the bearish sentiment at the moment. Markets returned to levels not seen since 'Black Monday' on Aug. 5, with total capitalization dropping below $2 trillion late last week. It has since recovered to $2.03 trillion but remains at its lowest level since early February. Bitcoin hit a weekend low of $53,300 but has since recovered to $55,000 during the Monday morning Asian trading session. Ethereum fared worse, with a brief dip below $2,200 over the weekend. The asset recovered to $2,300 level but remains weak.
Conclusion
Following weak economic data last week, markets are closely watching the CPI report which is likely to play a heavy role in the decision-making process at the September Fed meeting. A weaker-than-expected CPI report could increase the chances of a 50 basis points rate cut at the meeting on September 18. The CME Fed Watch tool currently has a 31% chance of a larger rate cut.
Amid weak economic data last week, markets are carefully assessing the likelihood of a rate cut at the September Fed meeting. The final decision from the central bank will greatly depend on CPI data this week.
Comments