Crypto markets saw a strong rally last week as bets on a possible rate cut by the Federal Reserve in September surged. Bitcoin approached the $65,000 level over the weekend, and Ethereum traded at $2,800. Now, the focus has shifted to the upcoming U.S. PCE data, which will provide further clues on the country's inflationary pressures, as well as several other key events.
So let’s look at the major events and see how they might impact market sentiment in the week ahead.
Fed officials say they want to shape market sentiment
So far, recent comments from Federal Reserve officials have fueled market optimism. For context, recent comments from several officials, including a speech by Fed Chairman Jerome Powell, have suggested the U.S. central bank is leaning toward a more dovish policy stance.
These naive comments solidified bets on a potential rate cut by the Federal Reserve at its upcoming September meeting. This move boosted market confidence, as evidenced by the recent rally in the crypto market.
Now, the market is eagerly awaiting further clues from Fed officials next week. On Monday, August 26, San Francisco Fed President Mary Daly is expected to appear in a television interview. After that, Atlanta Fed President Rafael Bostig is scheduled to speak on Wednesday, August 28.
The market expects their comments to be in sync with the hawkish remarks made by other officials last week. However, it is worth noting that any other moves, especially hawkish remarks, could further spark concerns among traders, which could lead to a potential sell-off in the broader financial sector, not to mention the crypto market.
Crypto Markets Await US PCE Inflation and Revised GDP Data
The broader financial markets are eagerly awaiting the upcoming US PCE data for further clarity on inflation. According to market estimates, US PCE inflation is expected to come in at 0.2% in July, up from 0.1% in the previous month. On a year-on-year basis, it is expected to remain unchanged at 2.5%.
Meanwhile, the core PCE figure is expected to remain unchanged at 0.2%, while on a year-on-year basis, it is expected to surge to 2.7% from 2.6% in June. However, if the figure shows higher inflation than expected, it could dampen investor sentiment.
Recently, Federal Reserve Chairman Jerome Powell hinted at a possible rate cut in September, fueling the rally in Bitcoin and Ethereum. However, he also said that the Fed will consider the upcoming numbers before making a decision. That being said, the upcoming PCE numbers will play a key role in the Fed’s upcoming policy rate stance.
On the other hand, the second revision of the second quarter U.S. GDP data is expected to be released on Thursday, August 29. It could provide insights into the health of the U.S. economy, which could have potential implications for the stock and crypto markets.
Meanwhile, most cryptocurrencies have seen strong surges last week, reflecting surging market optimism. Still, given the turbulence that has dominated the market recently, investors should do their due diligence before placing bets.
