Here's what could affect the market this week
The previous week was exceptionally harsh for the cryptocurrency market, as it saw its losses deepen over the weekend.
Despite a flood of employment statistics from the US not being enough to buoy the stock market, the nickname ‘Slumptember’ certainly held true. The upcoming week promises a focus on inflation figures alongside additional updates on unemployment claims.
The spotlight on Wednesday turns to the release of the Consumer Price Index (CPI) for August, a principal gauge of inflation monitored by the central bank. This data, indicative of price movements within the economy, plays a significant role in shaping consumer expenditure and is keenly observed by Federal Reserve officials due to its potential influence on interest rate decisions.
On Thursday, attention shifts to the unveiling of the Producer Price Index (PPI) for August, which charts the prices at the production level for businesses and manufacturers. Serving as an early sign of inflationary trends by tracking the costs involved in producing goods for consumers, it acts as a forecast for the next month’s CPI report.
Additionally, Thursday will provide insights into the labor market through the initial jobless claims data.
On Friday, the preliminary findings for September's Michigan Consumer Sentiment Index and Consumer Inflation Expectations will be shared. These reports, emerging from a regular survey measuring consumer confidence and their long-term inflation outlook, also contribute to the Federal Reserve’s calculations in the Index of Inflation Expectations.
In light of last week's disappointing economic figures, analysts are evaluating whether the Federal Reserve will opt for a 25- or 50-basis point reduction in interest rates at their September gathering, with the CPI statistics likely playing a critical role in this decision-making process.
A CPI report that fails to meet expectations could tip the balance in favor of a more substantial 50 bps reduction at the September 18 meeting. The CME Fed Watch tool presently assigns a 31% probability to this more significant cut.
In theory, a heftier rate cut should benefit the cryptocurrency markets, yet, current pessimistic views seem too entrenched to be easily dispelled at the moment.
The market's worth plummeted to levels last witnessed during the infamous Black Monday crash on August 5, with total capitalization falling below $2 trillion in the latter part of last week. It has slightly recovered to $2.03 trillion but still hovers at the lowest figure seen since the early days of February.
Bitcoin reached a low of $53,300 over the weekend but has seen a rebound, touching $55,000 during the Monday morning trading session in Asia. Ethereum experienced a sharper fall, dipping below $2,200 at one point over the weekend. It has since climbed back to $2,300 but continues to struggle.
