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Cryptocurrency Market recorded a strong rise this week with growing expectations that the US Federal Reserve (Fed) will cut interest rates in September. Bitcoin (BTC) approached the $65,000 level over the weekend, while Ethereum (ETH) rose to $2,800. Now, the market’s attention is turned to the upcoming Personal Consumption Expenditures (PCE) data and other significant developments that will provide more clues about inflation pressures in the US.
Fed Officials’ Statements Will Shape Market Sentiment
Recent statements from Fed officials have increased optimism in the market. Statements from officials, including Fed Chairman Jerome Powell, indicated that the Fed is moving towards a more dovish policy stance. The dovish tone of the officials’ statements reinforced expectations of a rate cut at the September meeting and supported the recent rally in the cryptocurrency market.
This week, the market is waiting for new statements from Fed officials. On Monday, San Francisco Fed President Mary Daly’s statements in a television interview are eagerly awaited. Then, on Wednesday, Atlanta Fed President Raphael Bostic’s statements could influence the market’s direction. The market expects these statements to be in line with the previous dovish comments. On the other hand, a hawkish statement could increase concerns across the market and trigger a wave of selling.
Markets Await US PCE Inflation and Revised GDP Data
Markets have entered a wait-and-see mode for the PCE data to be released this week to clear up uncertainty over inflation in the US. According to market forecasts, the July US PCE inflation data is expected to rise to 0.2% from 0.1% in the previous month. On an annual basis, it is expected to remain steady at 2.5%. At the same time, the core PCE data is expected to remain steady at 0.2% on a monthly basis but rise from 2.6% to 2.7% on an annual basis. Inflation data exceeding expectations could dampen market sentiment.
Fed Chairman Powell, while hinting at a rate cut in September and triggering a rally in Bitcoin and Ethereum, also stated that they would look at upcoming data before making this decision. Therefore, the upcoming PCE data will play a key role in determining the Fed’s stance on interest rate policy.
On the other hand, the second revision of the US second-quarter Gross Domestic Product (GDP) data will be released on Thursday. The data is expected to provide important clues about the health of the US economy, potentially impacting the stock and cryptocurrency market.
