CPI will be announced soon
Currently, the global risk market is in a state of high tension, with the focus focused on the upcoming CPI (Consumer Price Index) data. Yesterday's release of PPI (Producer Price Index) provided the market with a preliminary signal of CPI. The higher-than-expected growth of PPI intensified the market's concerns about possible delays in future interest rate cuts.
However, I have optimistic expectations for the upcoming CPI data. I think the performance of CPI will be stronger than PPI. The "strong" here is reflected in the fact that the CPI results will help strengthen the market's expectations for the Federal Reserve to cut interest rates. Why do I still hold this view even though PPI has exceeded expected growth? The reason is that PPI does not include the two key elements of energy and rent. In fact, both indicators fell back in April, which will alleviate the inflationary pressure that PPI may bring to a certain extent.
Given the market’s pessimistic expectations for CPI after the release of PPI, even if the CPI data is in line with expectations, it is very likely to trigger a positive reaction from risk markets, including the cryptocurrency market. If the CPI data is lower than expected, the market will see a significant rise. As for the possibility of CPI growing faster than expected, I think this risk is low, and even if it happens, the impact on the cryptocurrency market will be limited. I have pointed out in my previous analysis that the current weight of the unemployment rate has exceeded that of the CPI. Therefore, even if the CPI shows unexpected growth, it needs to be comprehensively evaluated in conjunction with the unemployment rate data released subsequently. If the unemployment rate continues to trend upward, the overall impact of a single CPI data on the market will be weakened.
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