The new US inflation data was released. How will it impact bitcoin?
The United States Personal Consumption Expenditure (PCE) Price Index was released today. It is a key indicator of inflation in the main financial power and is used to evaluate the change in the cost of living.
The report published by the Office of Economic Analysis of the US Department of Commerce highlights that the PCE registered a annual decrease from 2.2% to 2.1%, as planned.
When the PCE decreases, it indicates that The prices of goods and services purchased by households in the United States are decliningwhich suggests effective control of inflation.
As CriptoNoticias already reported, the Federal Reserve (Fed) of that country considers the PCE as one of the preferred indicators to guide its monetary policiesincluding possible interest rate cuts.
It is for this reason that the bitcoin (BTC) and cryptocurrency market was attentive to the publication of macroeconomic data from the United States. A new cut in the interest rate could generate bullish momentum for the price of the digital currency created by Satoshi Nakamoto.
When interest rates fall, the yield on traditional financial instruments like Treasury bonds, known to be “the safest investment in the world,” falls. That’s why Investors move their holdings into assets considered risky such as stocks, BTC and cryptocurrencieswith the aim of obtaining greater profits.
Although, in the medium and long term, it can be an upward driver, the market reacted with high downward volatility after the PCE was known. Perhaps, a “news selling” event may have occurred, consisting of taking profits after some expected event has occurred:
The PCE was not the only data of interest for the financial markets. This Thursday the US Department of Labor reported that the unemployment claims corresponding to the week ending October 26, they fell to 216,000, that is, below expectations of 230,000.
This is an important piece of information that prevents a headwind for market expectations and the growth of the economy of the main financial power.
The data indicate that economic activity shows moderate income growth and inflation control.
The week will end this Friday with the publication of the monthly employment report in that country. The report is important because it highlights the number of people who have been employed in the non-agricultural sector, as well as the unemployment rate.
On November 7, the Fed will announce its decision regarding interest rate policy. Everything indicates that the organization that directs Jerome Powell will implement the second reduction so far in 2024. Currently, the interest rate is 5% per year.