The cryptocurrency markets have been considerably affected by macroeconomic developments for quite some time. Tight monetary policy was the primary reason for the sales experienced over the past year. As interest rates increased, investors shifted towards less risky assets, resulting in losses in crypto and stock markets.
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The Fed raised interest rates because it needed to control inflation. Recent headline and core inflation data were quite positive. On the other hand, we need to closely monitor the PCE data to see where the Fed stands in its fight against inflation. The institution pays significant attention to personal consumption expenditures as an indicator of inflation. The anticipated data has just been released.
Expectations of lower-than-expected data should lead to an uptick in markets, while the opposite scenario is expected to trigger a downturn. At the same time, lower-than-expected data should push gold up and help weaken the dollar. For next year’s interest rate cuts to be scaled back and the magnitude of reductions to increase, a persistent decline in PCE data is also necessary.
Today’s data came in as follows;
- PCE (Annual) Announced: 3% (Expectation: 3%)
- PCE (Monthly) Announced: 0% (Expectation: 0.1%)
- Core PCE Announced 3.5% (Annual Expectation: 3.5%)
Additionally, the U.S. Unemployment Claims data was released. While the expectation was 218K, the previous month was announced at 209K. Now the data has come in at 218K. All the data indicate that the Fed is progressing as desired. This is quite positive for cryptocurrencies. The expectations for the Fed’s annual interest rate decision are as follows.
- Macro trends heavily influence crypto markets.
- Positive data suggest favorable conditions for crypto.
- Fed’s policies and PCE data are critical indicators.
