The cryptocurrency market recorded a strong rise during the week as expectations grew that the US Federal Reserve (Fed) would 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 focus is on the upcoming Personal Consumption Expenditures (PCE) data and other key 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 Chair Jerome Powell, indicated that the Fed is leaning towards a softer policy stance. The dovish tone of these 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 awaiting new statements from Fed officials. On Monday, San Francisco Fed President Mary Daly is expected to make statements in a television interview. Then, on Wednesday, Atlanta Fed President Raphael Bostic‘s statements could influence the market’s direction. The market expects these statements to be consistent with previous dovish comments. However, a hawkish statement could increase concerns and trigger a wave of selling.
Markets Await US PCE Inflation and Revised GDP Data
Markets are waiting for the PCE data to be released this week to clear up the uncertainty over inflation in the US. According to market forecasts, the July US PCE inflation data is expected to rise from 0.1% in the previous month to 0.2%. On an annual basis, it is expected to remain steady at 2.5%. Additionally, 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 Chair Powell, while hinting at a rate cut in September, stated that they would look at upcoming data before making a decision. Therefore, the upcoming PCE data will play a key role in determining the Fed’s stance on interest rate policy.
Meanwhile, the second revision of the US second-quarter Gross Domestic Product (GDP) data will be released on Thursday. This data is expected to provide important insights into the health of the US economy and impact the stock and cryptocurrency markets.
