The previous week proved to be quite harsh for the cryptocurrency market, with losses carrying over into the weekend.
A series of employment statistics released from the US couldn’t prevent stock markets from declining, living up to the negative connotation of ‘Slumptember.’ This week is packed with inflation data, alongside more reports on jobless claims.
Economic Events from Sept. 9-13
On Wednesday, the Consumer Price Index (CPI) for August will be announced. This is one of the two primary inflation metrics monitored by the central bank. The information reflects economic price trends and influences consumer spending, making it a significant focus for Federal Reserve policymakers as it affects interest rate strategies.
On Thursday, the Producer Price Index (PPI) for August will be issued, showing the input costs for producers and manufacturers. It serves as an early indicator of inflationary trends as it gauges the production costs of goods that consumers purchase, ultimately influencing the CPI report for the following month.
Additionally, Thursday will deliver initial jobless claims data, which will offer a broader insight into the state of the labor market.
Key Events This Week:
1. OPEC Monthly Report – Tuesday
2. August CPI Inflation data – Wednesday
3. Initial Jobless Claims data – Thursday
4. August PPI Inflation data – Thursday
5. Continuing Jobless Claims data – Thursday
6. Michigan Consumer Sentiment data – Friday
This is the…
— The Kobeissi Letter (@KobeissiLetter) September 8, 2024
On Friday, preliminary readings of September’s Michigan Consumer Sentiment Index pertaining to Consumer Inflation Expectations will be published. These reports derive from a monthly survey measuring consumer confidence and their perceptions of long-term inflation, which are also part of the Fed’s calculations for inflation expectations.
After last week’s disappointing economic data, the market is evaluating the likelihood of either a 25 or 50 basis point reduction in interest rates during the September Fed meeting, with the CPI report likely to be influential in the decision-making process.
A CPI report falling short of expectations might heighten the possibility of a 50 bps deduction during the meeting set for September 18. According to the CME Fed Watch tool, there is currently a 31% possibility of a more significant rate cut.
Crypto Market Outlook
In theory, a larger rate cut could bode well for the cryptocurrency markets. Nevertheless, this hasn’t seemed to alleviate the prevailing bearish mood currently affecting the market.
As markets plummeted back to levels reminiscent of the Black Monday crash on August 5, total market capitalization dipped below $2 trillion late last week. Although it has bounced back to $2.03 trillion, it still stands at its lowest point since early February.
Bitcoin dropped to a weekend low of $53,300 but has since rebounded to around $55,000 during the early Monday trading session in Asia. In contrast, Ethereum experienced a tougher time, briefly falling below $2,200 over the weekend. While it has managed to regain the $2,300 mark, it continues to exhibit weakness.
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