Higher-than-expected building permits in the US (1.67 million vs. 1.65 million) caused a short-term trend reversal in the US stock market on Tuesday last week. Investors took profits after the bear market rally in recent weeks, selling the S&P500 and Nasdaq100. Coupled with better-than-expected US retail sales (0.4 percent vs. -0.1 percent), this continued resilience in US consumer sentiment should encourage the Fed to stick with its planned rate hike policy.
Some experts already assume that Fed Chairman Jerome Powell may raise interest rates in the three remaining interest rate steps by the end of the year by up to 50 basis points more than was last rumored at the press conference. The correction in the classic financial market was also transferred to the crypto sector in the last trading week. The price of Bitcoin (BTC) corrected by 15 percentage points at the top and briefly slipped to the last all-time low of $20,800 before the price rebounded to above $21,300 just before the end of the week. Once again, the course of the US stock indices showed a great parallel to the course of Bitcoin. This week’s economic data should provide a first indication that the past few weeks of price rallies across assets may have ended for the time being and that the market is likely to continue to recover.
For the upcoming trading week, investors should pay particular attention to the release of the latest US gross domestic product (GDP) numbers. In addition, the announcement of the core PCE rate should be followed with great interest by market participants. Whether the current price consolidation in global financial markets will continue this week depends largely on key figures, as recently. You can read in the following overview article which other economic data from Europe and the US can influence the price development of Bitcoin, Ethereum and Co. in this week.
US new sales data for single-family homes
The week of numbers begins tomorrow, Tuesday 23 August, at 14:30 (CET) with the sale of new homes. The data, released monthly by the US Department of Commerce, reflects the current level of consumer spending. Higher-than-expected sales figures indicate an improvement in the recent slump in consumer confidence in the US. But should housing sales come in weaker than the 575,000 single-family homes that the experts had predicted, it would point to a further deterioration in consumer confidence. In the previous month, the number of houses sold was 590,000. The experts pay more attention to the figures for the sale of new houses than the development of the sale of existing properties. If demand continues to weaken in the housing market, which has been faltering recently, the central bank may have to adjust its current monetary policy. A stabilization of the real estate sector, on the other hand, would give the Fed more scope for further interest rate adjustments.
US durable goods Orders count midweek
Wednesday 24 August at 14:30 (CET) the new orders for durable goods adjusted for means of transport are released. In order to correctly assess a trend in incoming orders from US companies, orders from the volatile aircraft sector are excluded from the so-called core rate. The experts suspect a 0.2 percent increase in incoming orders compared to the previous month. In July, the value was still 0.4 percent. Falling orders for durable goods indicate increasing caution and uncertainty among buyers regarding developments in economic demand. If the forecast is exceeded against expectations, it indicates continued robustness in the US economy. The Fed would see this as a further argument for their planned rate hike policy.
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US gross domestic product figures for the second quarter of 2022
The following Thursday, August 25 at 14.30 (CET) follows the figures for the US gross domestic product (GDP) for the second quarter of 2022. The gross domestic product (GDP) is the most important economic indicator and describes the sum of the goods and services produced in the country, less intermediate services provided. Based on the GDP data, economists can draw conclusions about a country’s current economic strength. After -0.9 percent in the previous month of July, the experts predict a slightly lower contraction of the economy by -0.8 percentage points in August. Compared to a value of -1.6 percent in June, this value would represent a slight improvement. In particular, the Fed will likely hope that it will be able to successively raise key interest rates as planned. On the other hand, if the recession in the US with a worse GDP figure were to deepen, the top monetary watchdogs would have to reassess their current monetary policy.
US core PCE data closes the trading week
On the last day of the trading week, 26 August, the core rate for household consumption is released. Data published at 14:30 (CET) on changes in the price of services and goods excludes price changes for energy and food. In the previous month, PCE inflation was 0.6 percent mom. The Fed uses the PCE price index as a preferred measure to assess price pressures on citizens. If the PCE index for the current month turns out to be higher than expected, it would be doubly bad for the financial market. The Fed would need to continue to pursue its interest rate policy consistently to combat inflation. In addition, the US dollar would continue to gain strength, which is also detrimental to the prices of Bitcoin and Co.
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