Cryptocurrency markets are looking ahead to several US economic events this week following Donald Trump’s re-election and last week’s Federal Open Market Committee (FOMC) interest rate decision.
With the renewed importance of US macroeconomic data on Bitcoin (BTC) and cryptocurrency markets, traders and investors should prepare for volatility around the following events.
Consumer Price Index (CPI)
The US Consumer Price Index (CPI) is a crucial economic release this week, scheduled for release on Wednesday, November 13. Federal Reserve (Fed) Chairman Jerome Powell will release the CPI data for October.
The release comes after the FOMC opted to cut interest rates by 25 basis points (bps) at its meeting last week. Powell indicated that policymakers did not plan to raise rates, acknowledging that Americans are still feeling the effects of higher prices. In this context, the US CPI will be a focus of attention as it will influence future Fed policy decisions.
The US CPI for September was 2.4%, down from 2.5% in August and 2.9% in July. This indicates a general moderation in inflation since April.
Inflation trend in the US CPI🔺
Economists expect headline inflation to fall 0.2% in October. They also expect core CPI, the most closely watched U.S. economic indicator that strips out volatile food and energy costs, to fall 0.3%.
If Wednesday’s data comes in higher than expected, it would signal that inflation could return in the coming months. This could limit the Fed’s ability to cut policy rates further and, more importantly, derail Bitcoin’s upward trajectory.
“We keep in mind that the lower the prices, the more liquid institutional investors will have to invest in risky markets like cryptocurrencies,” said Crypto Future, a popular analyst on X.
Initial applications for unemployment benefits
Another US economic event worth watching this week is initial jobless claims. The number of continuing claims measures the size of the unemployed population. The Labor Department will release this macroeconomic data on Thursday, November 14, after new claims increased by 3,000 to 221,000 in the week ended November 2.
It is worth noting that the Federal Open Market Committee’s concerns about a gradual weakening in the labor market prompted the central bank to cut interest rates by half a percentage point in September. In this context, Fed officials announced a quarter-point rate cut last week. It is important to note that excessive unemployment claims will increase the risk of recession as unemployment reduces purchasing power.
Producer Price Index
The U.S. Bureau of Labor Statistics (BLS) will also report its core Producer Price Index (PPI) for October this week. This data measures price increases at the product level. It is important in financial markets because it measures inflation at the wholesale level.
Increases in PPI indicate higher production costs, which could lead to higher costs for energy and hardware needed to mine and process cryptocurrencies. Therefore, a rise in the underlying PPI on Friday could negatively impact Bitcoin and cryptocurrencies.
US retail sales
US retail sales round out the list of crypto-related US economic events this week. The Census Bureau will release US retail sales data on Friday, offering valuable insights into consumer spending trends.
This represents a large part of the US economy. In September, US retail sales increased by 0.4%, and are currently forecast to increase by 0.3% from the previous month.
Improved U.S. retail sales data for October will signal a reduction in recession fears, reflecting a strong economy and increased consumer spending. This momentum is likely to boost the appeal of riskier assets, including stocks and cryptocurrencies, as it points to healthier financial conditions.
As traders and investors await U.S. economic data, Bitcoin has gained about 2% since the start of Monday’s session. Despite these modest gains, the crypto giant remains well above the psychological $80,000 mark, trading at $80,808 as of this writing.
