Chiara Bianchi
The cryptocurrency market is on edge as it anticipates the release of the US CPI data, which is scheduled for later this week. This data is critical for understanding inflationary pressures in the economy and is expected to be a focal point for investors, especially after the recent US job data dampened market sentiment. The stronger-than-expected nonfarm payroll numbers have reduced hopes for a potential 50 basis points (bps) interest rate cut by the US Federal Reserve at its upcoming meeting.
US CPI Data Release Set for October 10
Traders are keeping a close watch on the upcoming CPI data, which will be released on Thursday, October 10. This figure is a crucial indicator that helps the US Federal Reserve assess inflation and make decisions regarding its monetary policy.
Market analysts expect the CPI to cool down to 0.1% for September, a slight drop from 0.2% in the previous month. On a year-over-year basis, inflation is anticipated to reach 2.3%, down from 2.5% in August.
Similarly, the Core CPI, which excludes volatile components like food and energy prices, is predicted to show a reduced inflation rate of 0.2%, compared to 0.3% in the prior month. However, on an annual basis, the Core CPI is projected to remain steady at 3.2%.
A cooling inflation rate could positively influence market sentiment, potentially sparking a rally in the cryptocurrency market. However, if the CPI data reveals higher-than-expected inflation, it could exacerbate the current selling pressure across the market.
Focus Shifts to US PPI and Federal Reserve Speeches
The recent US job data has already weighed on investor confidence, as it signaled a robust labor market. Typically, weaker nonfarm payroll numbers and a rising unemployment rate boost market sentiment by increasing the likelihood of a larger interest rate cut. However, given the strong labor data, many experts, including BlackRock’s CIO, now predict only a 25 bps rate cut at the Federal Reserve’s next meeting.
In addition to the CPI, another key inflation metric, the US Producer Price Index (PPI), will also be released next week. This data will provide further insights into inflationary trends and could play a significant role in influencing the Federal Reserve’s policy rate decisions.
Fed Officials’ Speeches in the Spotlight
A number of Federal Reserve officials are scheduled to speak next week, and their comments will be closely followed by investors for hints about the central bank’s next steps in monetary policy. Previously, Federal Reserve Chair Jerome Powell expressed optimism regarding cooling inflation in the US, and other officials have suggested that a larger rate cut of 50 bps could still be on the table.
With the release of key inflation data and statements from Fed officials, the coming days will be crucial for shaping market sentiment and guiding the crypto market’s trajectory.
