This week, three US economic events will be on the watch lists of crypto traders and investors. This interest comes against the backdrop of the continued influence of US macroeconomic data on Bitcoin (BTC) and cryptocurrency prices in 2024, after drying up last year.
Meanwhile, Bitcoin remains just below the psychological $100,000 level, hovering above $98,000 after retracting into the $95,000 range over the weekend.
Minutes of the Fed’s November FOMC meeting
All eyes will be on the Federal Reserve (Fed) on Tuesday, November 26, for the minutes of the FOMC (Federal Open Market Committee) meeting on November 6. Traders and investors will wait to see if the FOMC minutes shed any additional light on how policymakers assessed the economy ahead of the November meeting.
The minutes could also show at least some discussion of possible economic implications following the U.S. election results. They will come after policymakers voted to cut interest rates by 25 basis points (bps), following an initial cut of 50 bps. reduction in September. Investors will be looking for clues as to whether the pace of rate cuts could slow from here.
Meanwhile, data continues to suggest that the U.S. economy holds well. Yet there are many fears about the policies proposed by President-elect Donald Trump can be inflationary, potentially reducing the need to cut rates.
“Experts say Donald Trump’s election victory could change interest rate policy in the United States, as promised policies risk rising inflation… Tradition tells us that this increase in tariffs will increase inflation in the United States,” the Canadian Press reported, citing Sheila Block, an economist. with the Canadian Center for Policy Alternatives.
The FOMC minutes could notably affect Bitcoin and cryptocurrencies through their impact on general market sentiment. Any dovish or hawkish tone in the minutes can influence market expectations and lead to changes in investor behavior.
Initial Unemployment Claims
Another key economic event in the United States this week is the publication of the first unemployment claims on Wednesday, November 27. Weak labor market conditions have been a concern throughout the summer and fall, with jobless claims rising, the unemployment rate rising and monthly job gains slowing. This data influenced the Federal Reserve’s decision to cut interest rates by half a percentage point in September.
However, since then, labor market data has been better than expected, with the unemployment rate falling from a high of 4.3% to 4.1%. Previous initial data on jobless claims stood at 213,000 for the week ending November 16, below the estimate of 220,000, which was a good sign.
“In the United States, initial jobless claims fell by 6,000 to 213,000 last week, the lowest since April. The job market is strong,” noted the editor of the Lead-Lag report.
Weekly jobless claims have been falling steadily after hitting a more than one-year high last October. While initial claims for unemployment benefits are declining, the increase in continued claims indicates that employers are working to retain their workers. However, those who lose their jobs have difficulty finding new employment.
“Initial jobless claims remain very slow, but continuing claims have reached their highest level in three years. This reinforces the fact that employers are not actively laying off workers, but they are not hiring either,” commented Sevens Report.
For now, things appear to be going well on the job front under the Federal Reserve’s dual mandate. If the trend continues, it would suggest that economic woes are reversing and the job market is strengthening. This could lead to increased consumer spending and investments in traditional assets such as Bitcoin and crypto.
PCE inflation in the United States
Crypto market participants will also be watching Wednesday’s US PCE (Personal Consumption Expenditures) inflation data, as it is the Fed’s preferred indicator. Wednesday’s November PCE index is also a good watch. The data will show whether inflation continued to slow in November.
“Expectations: Monthly PCE expected to increase by 0.2%, annual PCE expected to be 2.3%, monthly Core PCE increase of 0.3%, annual Core PCE increase of 2.8%,” show the MarketWatch data.
Rising PCE figures often raise concerns about higher inflation levels in the economy. If PCE inflation exceeds expectations, it could weaken the U.S. dollar as investors anticipate possible monetary policy measures, such as interest rate hikes. A weaker dollar tends to benefit Bitcoin and other cryptocurrencies, which often exhibit an inverse correlation with the U.S. dollar.
In such scenarios, investors may turn to alternative assets like Bitcoin to protect against inflation. Cryptocurrencies are often seen as a store of value, similar to gold, during periods of inflationary pressure.
Currently, the Federal Reserve remains optimistic that inflation is moving closer to its 2% target. Policymakers have kept interest rates at historically high levels to combat inflationary surges over the past two years. Against this backdrop, traders and investors are closely watching price data for positive signs that could prompt the Fed to start easing interest rates.
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