US CPI & PPI Report, Powell’s Testimony Might Set Crypto Market’s Trend
Next week is important for the crypto market, as some major events are happening. These include releases of CPI and PPI data, speeches from important Fed officials and testimony from Jerome Powell, which could impact the direction of the cryptocurrency market next week.
Employment reports and tariffs involve inflation data before markets
After the January work report was released on February 7, U.S. dollar and bond yields rose, but stocks and cryptocurrencies prices fell. These market changes are not only affected by work reports. A week of summed up full of strong economic data and growing concerns about the upcoming U.S. tariffs. The January 2024 employment report was a key highlight of last week, but other economic data also had strong expectations.
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In its latest meeting, the Fed stabilized its main interest rate at 4.25%-4.50%, highlighting the need for continued improvements in inflation before considering lowering. Several Fed officials also mentioned that the price increase in tariffs could lead to its policies being stricter than market expectations.
CPI report on February 12
U.S. inflation data and comments from Fed Chairman Jerome Powell will play a crucial role in determining the direction of U.S. interest rates. In addition, any new updates to the Trump administration’s tariffs will be closely watched.
With the first decision by the central bank in 2025, this week may be quieter. However, with key CPI reports in the U.S. coming, there is still big news for investors.
In December, the main CPI rate increased slightly to 2.9% year-on-year, while the core interest rate fell to 3.2%. According to the inflation-based model of the Cleveland Fed, the main CPI rate in January is expected to drop to 2.85%, and the core interest rate drops slightly to 3.13%.
On February 11, major data including Hamack, Williams and Powell and Bank of England’s Mann and Bailey will deliver speeches. The next day, February 12, will be delivered with the Federal Reserve’s Bostic and Powell and the European Central Bank’s Nagel and Boe’s Greene, and will influence financial markets through insights into monetary policy.
Note that it will also turn to China’s inflation rate, Japan’s economic statistics, and UK’s GDP data.
Jerome Powell’s testimony
Fed Chairman Jerome Powell may not share much new information in two reports to Congress this week, but his appearance will still affect the market.
Powell will testify before the House on Wednesday and then before the Senate on Thursday to discuss the Fed’s view of the economy.
“He might stick with the FOMC script for January, but the market always seems to get something new from these looks, including many Congressional Q&A,” said Deutsche Bank analyst.
Economists believe he will respond to a common theme from a recent Fed meeting: There is currently no rush to lower interest rates on the Fed Fund.
US PPI report
If the U.S. releases strong producer price index (PPI) or retail sales data, it can boost the dollar by making investors think lower interest rates may delay. Despite the recent good performance of the market, any unexpected high inflation rate could make investors feel bullish.
Furthermore, if industrial production volumes are strong, it may increase the prices of oil and metals. However, if retail sales are weak, it may reduce demand for goods driven by consumer spending and may also have a negative impact on the dollar. As a result, we may see a bullish comeback in the cryptocurrency market.
