Next week is important for the crypto market because a few major events are happening. These include the release of the CPI and PPI data, speeches from important Federal Reserve officials, and testimony from Jerome Powell, which could all influence the direction of the crypto market in the coming week.
Jobs Report and Tariff Concerns Shake Markets Before Inflation Data
After the January jobs report came out on February 7, the dollar and bond yields increased, but stock and crypto prices dropped. These market changes were influenced by more than just the jobs report. It concluded a week filled with strong economic data and growing concerns about upcoming U.S. tariffs. The January 2024 jobs report was a key highlight of last week, but other economic data also came in strong and exceeded expectations.
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At its latest meeting, the Federal Reserve kept its main interest rate steady at 4.25%-4.50%, stressing that they need to see continuous improvement in inflation before thinking about reducing rates. Several Fed officials also mentioned that prices pushed up by tariffs might lead to keeping their policies stricter for a longer period than what the markets anticipate.
CPI Report on 12 February
U.S. inflation figures and remarks from Federal Reserve Chair Jerome Powell will play a crucial role in deciding the direction of U.S. interest rates. Additionally, any new updates on tariffs from the Trump administration will be closely watched.
With the first central bank decisions of 2025 behind us, this week might be quieter. However, there’s still significant news for investors, as the crucial CPI report from the United States is coming up.
In December, the main CPI rate slightly increased to 2.9% year-over-year, while the core rate decreased to 3.2%. According to predictions from the Cleveland Fed’s Inflation Nowcasting model, the main CPI rate is expected to have dropped to 2.85% in January, and the core rate to have slightly decreased to 3.13%.
On February 11, key figures from the Federal Reserve, including Hammack, Williams, and Powell, along with the Bank of England’s Mann and Bailey, will deliver speeches. The next day, February 12, will feature talks from the Fed’s Bostic and Powell, as well as the ECB’s Nagel and the BoE’s Greene, potentially impacting financial markets with their insights on monetary policy.
Attention will also turn to inflation numbers from China, economic statistics from Japan, and data on the U.K.’s gross domestic product.
Jerome Powell’s Testimony to Take Place
Federal Reserve Chair Jerome Powell probably won’t share much new information this week during his twice-a-year report to Congress, but his appearance could still affect the markets.
Powell will testify in the House of Representatives on Wednesday and then in the Senate on Thursday, discussing the Fed’s view on the economy.
Deutsche Bank analysts said, “He will likely stick to the January FOMC script but the market always seems to get something new out of these appearances, which include a lot of congressional Q&A.”
Economists believe he will echo a common theme from recent Federal Reserve meetings: there is currently no hurry to lower the key fed funds interest rate.
US PPI Report
If the US releases strong producer price index (PPI) or retail sales figures, it could boost the dollar by making investors think that interest rate cuts might be delayed. Although markets have been doing well lately, any unexpectedly high inflation could make investors feel less bullish.
Additionally, if industrial production numbers are strong, it could increase the prices of oil and metals. However, if retail sales are weak, it could reduce demand for commodities driven by consumer spending and could also negatively impact the dollar. As a result, we might see a bullish comeback in the crypto market.
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