- In terms of macro data, we are in for a quiet week
- Powell’s speech to US authorities will play a key role
Last week, bitcoin fell below $25k for the first time in 3 months. We saw a lot of leveraged long liquidations as well as mass panic. However, at the end of the week, buyers perked up and raised the price of BTC to $26,500. This happened due to the fact that the Fed did not raise the interest rate. Additional positive news for bitcoin was the filing of an application for a new Bitcoin Spot ETF from the world’s largest asset manager Blackrock. The weakness of the dollar index (DXY) also played into the hands – for the first time in several weeks, it fell below 103 p.p.
In addition to positive economic data, the agreement between the SEC and Binance helped the market. The commission will not freeze the assets of an American company, so clients are not in danger. All this creates additional potential for growth.
The new trading week will be opened by data from the US housing market. They will be published tomorrow at 16:00. On Wednesday and Thursday, US Federal Reserve Chairman Jerome Powell will take part in the annual hearings on US monetary policy in the Senate and House of Representatives. On Thursday, there will be data on sales of existing real estate. We are also waiting for several other metrics that may affect the alignment of forces of bulls and bears.
Monday. Rest in the markets
US stock markets are closed today (national holiday). But we will find out the Canadian CPI data. Also today, members of the ECB will make comments on the monetary policy of the Eurozone.
Tuesday. US Real Estate Market Data
The US Census Bureau will release preliminary US building permit estimates for May. This is a leading indicator for the future state of the housing market.
In the previous month, the total number of new building permits was in line with experts’ expectations. However, US stocks corrected by about three percentage points and Bitcoin fell by 4%.
Analysts expect that in May the situation on the real estate market will improve somewhat. Compared to the previous month, experts predict a slight increase from 1.417 million in April to 1.435 million in May. If, as expected, the number of building permits issued is higher than in the previous month, the stock market (and with it the price of bitcoin) may rise in quotes.
Please note that the US stock exchanges are also closed on Tuesday due to a public holiday.
Other events: Bank of Australia report, Japanese industrial data, industrial inflation in Germany.
Wednesday. Powell’s report to Congress
The most important macro event of the week is Jerome Powell’s speech before the US Congress. He gives this report every six months, and it lasts two days. So keep an eye on the news on Wednesday and Thursday.
During the report, the head of the Fed will talk about the current state of the US economy and give his forecasts. Powell will also answer a number of questions from politicians. Markets will be listening carefully to the comments in light of last week’s decision and the Fed’s report on Friday. This document highlights that there is tension in the financial sector and banks, but the Fed does not plan to cut interest rates.
Possible Market Reactions to the Powell Report
So, the speech of the head of the Fed will begin at 16:00 Kyiv time on Wednesday. So during this period you need to be as careful as possible.
Often the stock market reacts with a decline to criticisms of American politicians regarding inflation, banking problems, future economic risks and other issues. Also, investors may react painfully to Powell’s vague statements or lack of response.
The debate will be interesting to watch in light of future US elections. Republicans’ remarks may provide insights into their upcoming campaign. And also to shed more light on the relationship between the Fed and the US Congress in general.
Other Wednesday events: UK inflation data, Bundesbank President and ECB member Joachim Nagel’s speech, US loan applications, Fed member Goolsby’s speech, Canadian retail data.
Thursday. New data on the real estate market
June 22 The National Association of Realtors releases the latest existing property sales data for May. These figures are considered an important indicator of the state of the market in the US. If sales figures exceed the expectations of experts (4.24 million), this indicates an increase in consumer spending and stabilization of the US economy. If forecasts do not materialize, this will be confirmation that the housing market will continue to fall.
Over the past two months, sales figures have twice in a row been lower than experts’ forecasts and caused price consolidation in the stock and cryptocurrency markets. So it is worth keeping an eye on this metric.
Note that most likely, home sales will remain low. This is not surprising given the high interest rates on new bank loans. So experts expect that after the release of the report, the dollar will recover after the recent rate correction.
Thursday’s other metrics: Swiss Bank interest rate decision, Bank of England Governor’s speech, Turkey interest rate decision, US jobless claims, continuation of Powell’s report to Congress, Conference Board Economic Performance Index, Kansas City Fed Regional Industry Index.
Friday. US PMI Services
The week ends with fresh Purchasing Managers’ Indices (PMI) for the services sector in the US. The May figures turned out to be lower than experts’ expectations. But despite a slight decline, the services sector is still stronger than other sectors (eg, industry).
Analysts are now forecasting a PMI of 54.0. If the numbers are significantly lower, investors could use this as an opportunity to sell more shares with a focus on services. This will put pressure on the US stock market as a whole. However, the impact of this on the price of cryptocurrencies is difficult to predict, because bitcoin is most closely correlated with the shares of tech companies (Nasdaq).
In general, we can say that the low PMI and problems in the field will increase the likelihood of a further decline in inflation in the coming months.
If the PMI data turns out to be stronger than forecasts, US stock indices may continue to grow and temporarily stabilize the cryptocurrency market.
Other metrics Friday: inflation in Japan, retail sales in the UK and the Eurozone, the index of business activity in the US manufacturing industry.
Do not forget that events within the cryptocurrency industry have a strong influence on the charts. It is convenient to follow the most important news on our website and in Telegram.