- The coming week will be pretty busy in terms of macro data
- Traders must follow them to predict the markets
This weekend, the crypto sector continued to recover. As a result, bitcoin moments reached a new annual high of $31,443, but could not gain a foothold at this mark. On Monday, its price fell to $30,300. However, on a weekly basis, the king of cryptocurrencies rose by 14%. But in the US stock markets, we are seeing consolidation. The Nasdaq100 tech index posted its first weekly decline since mid-April of -1.4%.
There are several key reasons why the crypto market is growing. We offer you to read more about them and about the results of the last week in a special review.
This week, Bitcoin needs to confirm its recovery and stabilize above the $30,000 mark in a sustainable way to aim for new levels of growth in the short to medium term. This is where economic data and industry news come into play.
Half year results
The second quarter of 2023 is coming to an end, and global analysts are summing up.
The year began with a wave of optimism around China in the wake of the coronavirus pandemic and hopes that inflation may have peaked.
Since then, we’ve been through the US banking crisis, the collapse of Credit Suisse, and a tough fight against inflation. This has made the markets sluggish for investment.
The hype around artificial intelligence (AI) has made big tech the top-performing asset class in 2023. They increased by an impressive 75%. But for the rest of the market, it was a tough semester. Only a few areas showed an exception, such as Japanese stocks and European stocks of luxury companies.
Surprisingly, in all this turmoil, the only other asset class that comes close to Big Tech returns is Bitcoin. The main cryptocurrency has grown by 73%, recovering from the extremely unsuccessful second half of 2022, when bitcoin lost 20%.
A new trading week will open data on consumer confidence in the US. In the middle of the week, we are waiting for the speeches of the head of the Fed, Jerome Powell, and the president of the Atlanta Fed, Rafael Bostic. They will give an up-to-date picture of the US economy.
Also this week, the Federal Reserve Bank will announce the results of its annual bank stress test. And will present the current estimates of GDP. Finally, on the last day of the trading week, investors will react to new US PCE core inflation data.
Monday. Christine Lagarde performance
Markets remain relatively calm today. But European investors are paying attention to the annual ECB forum on central banks. It will begin with a speech by ECB President Christine Lagarde at 17:30. Participants expect to hear from the official hints at future decisions in the economy. It is possible that the head of the ECB will also announce some news about the regulation of cryptocurrencies in the Eurozone.
Also due today is the Federal Reserve Bank of Dallas Texas Manufacturing Review. And the German Institute IFO will present data on the mood in business circles for June.
Tuesday. US Consumer Confidence Index
Tomorrow the Conference Board (CB) will release its monthly US consumer confidence data for June. In the previous month, it amounted to 102.3, which was higher than the expert forecast of 99.0. In June, market observers predict a rise to 104.0. If the estimates turn out to be lower, this will increase the likelihood of a recession in the US.
In 2023, weak consumer data has already had a negative impact on price dynamics in the financial market. Persistently weak consumer confidence could once again play a trick on stock indices and also temporarily affect the crypto sector. So let’s keep an eye on that metric.
If the analysts’ forecast comes true or even exceeds expectations, this will indicate consumer optimism in the US. The cryptocurrency chart can benefit from this, as we saw last April.
Tuesday’s other metrics: another speech by Lagarde, US fixed capital orders data, Canadian inflation, Case & Shiller US Metropolitan Housing Price Index, US home sales, Richmond Regional Fed Index.
Wednesday. The results of the stress test of US banks
On June 28, the US Federal Reserve will announce the results of the stress test of US banks. In view of several emergency measures taken by the authorities in previous months to bail out various financial institutions, this report is highly anticipated. After all, in fact, the Fed’s liquidity helped prevent the collapse of the banking system. Therefore, market participants will closely monitor the state of medium-sized banks in the US. If some regional banks fail the test, the result could be a significant increase in volatility in the US financial sector. If more money is needed for the ailing banking system, the dollar index (DXY) could come under further pressure. Thus, the weakening of the dollar will allow bitcoin and altcoins to rise.
Also on Wednesday, there will be a triple speech by the heads of central banks – the US, the EU and the UK. Of particular interest will be the speech of Andrew Bailey, President of the British Central Bank (BOE). Recently, the economic performance of the UK has been falling more than in other regions. And last week BOE raised the rate immediately by 0.5% instead of the expected 0.25%. Andrew Bailey’s speech will help clarify the situation that is happening in the UK.
In turn, Powell’s speech is likely to focus on the recent pause in interest rates and lower US inflation.
ECB President Christine Lagarde’s speech will end Wednesday evening. Most likely, she will talk about the prices of raw materials. The war in Ukraine and the destruction of the Kakhovskaya hydroelectric power station may lead to an increase in prices for wheat and rye. This means that in the coming months the situation on the raw materials market may worsen again. This event may prevent the plans of the ECB to take a break in raising interest rates.
Other environment metrics: German consumer confidence index, retail trade in Spain, speech by Luis de Guindos from the ECB, speeches by the head of the Central Bank of Japan, Ueda.
Thursday. US GDP
June 29 will be presented the latest preliminary data on US GDP for the first quarter of trading. Analysts expect the gross domestic product to rise to 1.4%. If the forecast comes true, this indicates at least a stabilization of the US economy. In response, market participants may take a positive view of the recovery trend and continue to hold their shares and cryptocurrency assets. And perhaps even increase investment.
On the other hand, if the GDP turns out to be weak, the financial market will react negatively. In such a scenario, the consolidation of the price of bitcoin is not excluded.
Thursday’s other metrics are Japan’s retail sales, Spain’s inflation, Eurozone Business Sentiment, Powell and Bostic’s speech from the Federal Reserve Bank of Atlanta.
Friday. PCE in the US, inflation in the EU and data from China
On June 30, the Federal Reserve’s favorite measure of inflation, the core PCE, comes out. This metric reflects price changes for goods and services purchased by consumers for personal consumption, excluding food and energy.
In the last 2 reports, core PCE inflation has been so high that the Fed needs to raise rates. Analysts now expect further growth of +0.4%. If core inflation is even higher, investors will view it negatively. Under such a scenario, the likelihood of raising interest rates at the next Fed meeting will increase.
So, if PCE turns out to be higher than forecasts, market participants may decide to get rid of risky stocks and cryptocurrencies. A temporary downturn and increased volatility are not ruled out.
If core inflation rises less than analysts expect, the financial market should end the trading week on a positive note. As we saw in March, the BTC exchange rate is benefiting from lower inflation rates.
The Eurozone will present its preliminary CPI data this Friday. Core inflation is expected to rise to 5.5%. On such news, the dollar index may jump and weaken the position of bitcoin.
Also on Friday, China’s Manufacturing/Non-Manufacturing/Composite PMI will be released. Investors will be keeping a close eye on them as China has been showing mixed economic results lately. Recently, S&P Global even lowered its forecast for China’s GDP growth to 5.2% from 5.5% this year.
According to forecasts, PMI should be 49%. If the data turns out to be weaker, this will strengthen the dollar index (and weaken the position of bitcoin in the short term).
Also, do not forget to keep track of the news of the crypto industry and the financial sector, which also greatly affect the rate of cryptocurrencies. It is most convenient to receive information on our website and in Telegram. We wish you all a productive working week.