As the last week of September commences, financial markets look out for multiple US economic events. However, a handful of them will influence the portfolio and investment strategies of crypto investors, either directly or indirectly.
Bitcoin (BTC) is off to a good start this week, holding well above the $63,000 threshold in the early hours of the Asian session.
Manufacturing and Services PMI
The business survey committees will release data about the purchasing managers’ index (PMI) for manufacturing and services on Monday. The report will shed light on the health of these sectors.
With a previous index of 55.7 and a median forecast of 55.4, a higher PMI above 50 would suggest expansion in the manufacturing and services sectors. This could be positive for risk assets like Bitcoin, especially if the report signals economic growth.
Consumer Confidence and Consumer Sentiment
The consumer confidence report, set to release on Tuesday, September 24, will be followed closely by the consumer sentiment report on Friday. These two surveys, though from different sources, gauge how optimistic or pessimistic consumers feel about the economy’s future.
Both reports reflect consumer attitudes toward their financial outlook and their perception of business conditions and the job market for the next six months. Essentially, they offer a snapshot of how people feel about the economy today and in the near future.
As inflation eases in the US, optimism among consumers is growing. This positive shift is largely due to expectations that inflation will continue to decline through the end of the year, making it easier for households to manage their finances.
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If these reports show increased confidence and sentiment, it could suggest a greater willingness among consumers to spend. This improved outlook could also have a ripple effect, potentially benefiting speculative assets like Bitcoin. A more confident consumer base typically means greater risk tolerance, which bodes well for investments perceived as high risk but high reward.
Q2 GDP
The second-quarter Gross Domestic Product (GDP) report, set for release on Thursday, is one of the week’s key economic indicators. This will be the second revision following July’s initial report, which showed a 2.8% increase quarter-over-quarter. That figure significantly surpassed the prior quarter’s 1.4% growth.
The rise in domestic spending has been the main driver behind GDP growth. Increased consumer spending often boosts the economy and inflation while strengthening the US dollar. Conversely, a slowdown in spending could reduce these effects.
A strong GDP report could bolster US citizens’ confidence in the economy’s stability. This positive sentiment may also benefit Bitcoin’s price, as many investors view it as an alternative investment or hedge. Additionally, robust economic data could reinforce the Federal Reserve’s more measured approach to monetary policy. Crypto investors are particularly attuned to Fed policies, as they directly influence market liquidity and conditions.
Fed Speaks: Jerome Powell and Michelle Bowman
Federal Reserve Chair Jerome Powell is scheduled to deliver his opening remarks on Thursday, with markets eagerly awaiting his commentary following recent inflation data and the Federal Open Market Committee’s 50 basis-point interest rate cut. Powell’s statements could have a significant impact on market sentiment.
In addition to Powell’s address, several other Fed officials will speak throughout the week. Crypto investors are expected to closely monitor these comments between Monday and Friday, especially following last week’s unexpected rate cut. Of particular interest is Fed Governor Michelle Bowman, who is slated to speak on both Tuesday and Thursday.
“The committee’s larger policy action could be interpreted as a premature declaration of victory on our price stability mandate. I believe that moving at a measured pace toward a more neutral policy stance will ensure further progress in bringing inflation down to our 2% target,” Bowman said in a statement on Friday.
Bowman has become a focal point due to her dissenting stance on the recent policy decision, marking the first Fed governor to hold a variant view since 2005. Given her unique position, Bowman’s upcoming remarks will be closely watched, as investors seek clarity on her concerns about the speed of rate reductions.
Core PCE Inflation
The Personal Consumption Expenditures (PCE) Price Index, due on Friday, will be a key economic indicator to watch this week. The core PCE, which excludes volatile categories like food and energy, is one of the critical data points the Federal Reserve uses to assess inflation trends and guide future monetary policy decisions.
Analysts predict a 0.2% month-over-month rise in core PCE and a 2.7% year-on-year increase. Meanwhile, headline inflation is expected to slow to 2.3%.
If PCE inflation comes in lower than expected for August, it could boost the likelihood of additional interest rate cuts, a development that would be favorable for Bitcoin. Lower rates tend to encourage borrowing, leading to increased liquidity in the financial markets.
Read more: How to Protect Yourself From Inflation Using Cryptocurrency
For Bitcoin, an environment of lower rates and more liquidity is typically positive, as investors often turn to riskier assets during such periods. BeInCrypto data shows Bitcoin is trading for $63,882 at the time of writing, up by 1.51% since the Monday session started.
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