This week, there are three US economic events on the watch lists of crypto traders and investors. This interest comes amid the ongoing impact of US economic data on Bitcoin prices.
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Minutes of the November FOMC Meeting
All eyes will be on the Federal Reserve (Fed) on Tuesday, November 26, for the minutes of the November 6 Federal Open Market Committee (FOMC) meeting.
Traders and investors will be watching to see if the FOMC minutes shed more light on how policymakers are assessing the economy ahead of the November meeting.
The minutes may also show at least some discussion of the potential economic fallout from the U.S. election result. It will come after policymakers voted to cut interest rates by 25 basis points (bps), following an initial 50bps cut in September. Investors will be looking for any signs of whether the pace of rate cuts could slow from here.
Meanwhile, data continues to suggest that the US economy is performing well. However, concerns are growing that President-elect Donald Trump’s proposed policies could be inflationary, reducing the need for rate cuts.
“Experts say Donald Trump’s election victory could change U.S. interest rate policy as his promised policies risk boosting inflation…Tradition tells us that higher tariffs will boost inflation in the United States,” The Canadian Press reported, citing Sheila Block, an economist at Canada’s Centre for Policy Alternatives.
One way the FOMC minutes could impact Bitcoin and cryptocurrencies is through their impact on overall market sentiment. Any dovish or hawkish tones in the minutes could affect market expectations and lead to changes in investor behavior.
Initial unemployment claims
Another major U.S. economic event this week is the release of initial jobless claims on Wednesday, November 27. The weakness in the labor market has been a concern over the summer and fall. With jobless claims rising, the unemployment rate increasing, and monthly job gains slowing. This data influenced the Federal Reserve’s decision to cut interest rates by half a percentage point in September.
However, since then, labor market data has been better than expected. The unemployment rate has fallen from a peak of 4.3% to 4.1%. Initial jobless claims came in at 213,000 for the week ended November 16, below the estimate of 220,000, which was a good sign.
“U.S. initial jobless claims fell by 6,000 to 213,000 last week, the lowest since April. The labor market is strong,” noted the publisher of the Lead-Lag Report.
Weekly jobless claims have been steadily declining after hitting a more than one-year high in October. While initial jobless claims are falling, the rise in continuing claims suggests that employers are trying to retain workers. However, those who lose their jobs face challenges in securing new ones.
“Initial jobless claims remain very sluggish but continuing claims are at a three-year high. This reinforces that employers are not actively laying off workers, but they are not actively hiring either,” Sevens commented.
Right now, things seem to be going well on the business side of the Fed’s dual mandate. If the trend continues, it will signal that economic pain is easing and the labor market is gaining strength. That could lead to increased consumer spending and investment in traditional assets like Bitcoin and cryptocurrencies.
US PCE Inflation
Cryptocurrency market participants will also be watching the US PCE (personal consumption expenditures) inflation data for October on Wednesday. This is the Federal Reserve’s preferred measure. The November PCE on Wednesday is also worth watching. The data will show whether inflation continued to slow in November.
“Forecast: Monthly PCE is expected to rise 0.2%, annual PCE is expected to rise 2.3%, monthly core PCE is expected to increase 0.3%, annual core PCE is expected to increase 2.8%,” data from MarketWatch shows.
High PCE numbers often raise concerns about higher levels of inflation in the economy. If PCE inflation exceeds expectations, the US dollar could weaken as investors anticipate potential monetary policy actions, such as interest rate hikes. A weaker dollar tends to benefit Bitcoin and other cryptocurrencies, which often exhibit an inverse correlation with the US dollar.
In such scenarios, investors may turn to alternative assets such as Bitcoin as a hedge against inflation. Cryptocurrencies are often considered a store of value, similar to gold, during periods of inflationary pressure.
Currently, the Federal Reserve remains optimistic that inflation is approaching its 2% target. Policymakers have kept interest rates at historically high levels to combat inflation spikes over the past two years. In this context, traders and investors are closely watching price data for positive signals that might prompt the Fed to start easing interest rates.