- Expected Increase in PCE Inflation
- Possible Fed Rate Cuts in September
- Pressure on Bitcoin and Ethereum Prices
US economists forecast that personal consumption expenditures (PCE) inflation will remain high, leading to potential delays in Fed rate cuts and further pressure on Bitcoin and Ethereum prices.
Expected Increase in PCE Inflation
Economists predict that the PCE inflation for July will be at 2.6%, up from 2.5% previously. Monthly PCE inflation is also expected to rise from 0.1% to 0.2%. Core PCE inflation, excluding food and energy prices, is projected at 2.7% annually and 0.18% monthly. Despite the expected increase, markets hope for continued inflation decline. “We’re going to see continued progress on inflation,” said José Torres, senior economist at Interactive Brokers, attributing it to falling goods and energy prices, despite current rises in oil, natural gas, and gold prices.
Possible Fed Rate Cuts in September
The European Central Bank (ECB) is considering a rate cut on September 12, providing traders with clues before the Fed's meeting on September 18. The Fed may start rate cuts in September, contingent on inflation and employment data. CME FedWatch data shows a 65.5% probability of a 25 bp rate cut by the Fed.
Pressure on Bitcoin and Ethereum Prices
Bitcoin and Ethereum prices may drop if PCE inflation is higher than expected. Bitcoin's price increased by 2% to $60,142, while trading volume declined by 23%. The NVT Golden Cross indicator for Bitcoin shows a loss of upward momentum. The expiry of Bitcoin and Ethereum options on Deribit, worth $3.65 billion and $1.35 billion respectively, could further impact prices.
The release of July's PCE inflation data has significantly influenced market expectations for Fed rate cuts and may increase selling pressure on cryptocurrency prices in the near future.
Comments