- The main driver of the week will be the CPI in the US
- The Fed relies on it when planning rates
The crypto market started the new week with a decline. This was influenced by Friday’s macro indicators on nonfarm payrolls and US employment. They showed that jobs and wages continue to rise. This reduced the fear of a recession and strengthened the dollar. And as we remember, a strong dollar means a weak bitcoin. Detailed results of the last macro-week can be found in our material.
Also, the market is panicking at the news about possible taxes on mining in the US. After all, high taxes will make bitcoin mining more expensive.
The main topic that can stir up the market next week will, of course, be inflation data from the US and trade data from China.
Monday. Survey of bankers in the USA
Today at 21:00 Kyiv time, the US will publish a survey of Fed loan officers. It covers 80 major domestic banks and 24 branches and agencies of foreign banks in the US.
The questions relate to changes in the standards and conditions of bank lending, as well as the situation in business and the general demand for loans among the population. Questions on one or two other related topics are often included here as needed.
Now it is especially important to monitor the mood in the banking sector, especially in regional US institutions. JPMorgan Chase raised its outlook for three regional banks (Western Alliance, Zions and Comerica Inc), saying their share prices were “materially mispriced.” On the news, PacWest Bancorp’s share price rebounded 81% on Friday after a previous big drop. So the latest report will help clarify the situation.
Other Monday’s metrics: Bank of Japan meeting minutes, Sentix index (Eurozone business climate), Australian business climate index.
Tuesday. China trade reports
Tomorrow we do not expect important events. But for the big picture, it is useful to check the latest data on China’s trade balance (imports, exports). Their exports are expected to slow down sharply again after a surge in March (from 14.8% to 8%).
Also on Tuesday, John C. Williams of the New York Fed will speak.
Wednesday. US CPI
On May 10, the US is to publish inflation data for April. Economists forecast for core CPI (excluding food and fuel) at 5.5%. And headline inflation is at 5% year on year.
If the data is like this or lower, it will mean that inflation is weakening, but still persisting. This means that the Fed may pause in raising rates in June. So the markets for stocks and cryptocurrencies should respond with growth. Given the good data on the US labor market last week, this can be interpreted as another sign of economic stabilization.
Higher inflation will be a harbinger that the Fed will keep interest rates high for longer. This will create additional difficulties for the market and may lead to a temporary decline in the BTC rate.
Other Wednesday reports: credit and money supply data in China, inflation data in Germany, mortgage applications in the US.
Thursday. Inflation in China and PPI in the US
At 14:30 Kyiv time, the US will present the current Producer Price Indices (PPI) for April.
Analysts expect a strong rise to 0.5% (previous metric was -0.3%). This means that product prices, which have been gradually declining recently, will again rise significantly. The last time producer prices rose so sharply was in January.
If PPI grows, as experts expect, we can predict the growth of the dollar index and the negative impact on the stock and cryptocurrency markets.
If producer price indices turn out to be lower than experts’ estimates, this will weaken the dollar and strengthen bitcoin.
On May 11, China is due to release fresh inflation figures. Last week’s data showed China’s manufacturing activity unexpectedly contracted in April. This reinforces the authorities’ need to stimulate the economy. Especially against the background of suppressed global demand for goods and problems in the real estate sector.
So, if inflation is higher than forecast (1%), this may force the People’s Bank of China to raise rates, which it has not done so far. This will weaken the dollar and have a good effect on cryptocurrencies in the long run.
Other events on Thursday: minutes and decision of the Bank of England (expected rate hike by 0.25%) and speech by Fed member Christopher Waller.
Friday. US consumer sentiment
On May 12, market participants will read preliminary Sentiment/Inflation Expectations reports from the University of Michigan. They reflect the level of consumer optimism regarding US economic development.
In the previous release for April, household confidence dropped significantly to 60.5. For May, experts predict a figure of 59.8. This may indicate an economic downturn in the coming months. However, recent strong data on the labor market may come as a surprise and lift the sentiment index.
Also on Friday, the Consumer Confidence Index will be released. It is expected to fall to 63.0 (previous figures – 63.5). If the decline in consumer confidence is confirmed, or even lower, then the initial reaction may be the consolidation of prices in the markets. Including the decline in the crypto market.
If private households remain confident in economic development, this will once again underpin the resilience of the first four trading months.
Friday’s other metrics: PMIs from Australia, inflation data from India, UK GDP, inflation data from France and Spain.
