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The past trading week was characterized by a wide range of profit-taking on the financial markets. An increasingly gloomy picture on the real estate market coupled with rising inflation figures in Europe and the USA increasingly caused investors to flee to defensive stocks and the US dollar. The world’s largest stock index, the S&P 500, recorded its heaviest daily loss in the trading year 2023 in the last half of the week. The price corrections on the classic financial market also caused the Bitcoin price and with it the entire crypto market to trend more southwards. At least the US stock indices were able to contain their intraday price losses on Friday evening and went into the weekend almost unchanged. Although Bitcoin corrected briefly over the weekend to a new 10-day low of US$ 22,770, the buyers were there and balanced the price of the crypto key currency back above the psychological price mark of US$ 23,000.
Whether the current price correction on the crypto market has already ended or whether new lows will start in the new trading week should be largely determined by the development of the US dollar index (DXY) and the US stock markets. You can read which targets are likely to become relevant for Bitcoin in the latest Bitcoin analysis
The following economic data will be relevant this week
This month, February 27th, is presented as the latest US Durable Goods Orders. The following day is the announcement of the CB Consumer Confidence in the USA. In the middle of the week, the ISM purchasing managers’ indices for the US manufacturing sector are the focus of the market players. The trading week will be rounded off with the final data from the US purchasing managers’ indices for the service sector.
Orders received for durable goods
Monday, February 27, 2023: At 2:30 p.m. (CET), the final figures for incoming orders for durable goods in January will be published. The market experts expect a slight increase of 0.1 percentage points compared to the previous month. Compared to the previous year, however, a drastic slump of -4.0 percent is forecast. In the previous month, incoming orders at +5.6 percent were above expectations of +2.6 percent. If the figures are in line with the forecasts and incoming orders drop significantly, as expected, the US dollar should tend negatively as a result. Since the stock market has recently been trending bullish after strong incoming orders, it is difficult to predict how the market could develop as a result of weak data.
US consumer confidence figures
Tuesday, February 28, 2023: On Tuesday at 4:00 p.m. (CET) the Conference Board (CB) will announce new figures on US consumer confidence for the trading month of January. The level of optimism about the US economy came in at 107.1 last month, below expectations of 109.0. For the month of February, the analysts expect a slight increase to 108.5. If the forecast is met or even exceeded, the US dollar index (DXY) should continue its upward trend of the previous week. As in the last trading week, this should once again have a negative effect on the price development on the crypto market. On the other hand, if analyst expectations are missed and consumer confidence falls further, the probability of a recession in the USA increases. Despite a falling US dollar, the subsequent correction on the stock market could have a bearish effect on the prices of Bitcoin and Co. Never before has the impact on the markets been so difficult to forecast.
US purchasing managers’ index for the manufacturing economy
Wednesday, March 01, 2023: Midweek investors look to the ISM Manufacturing Purchasing Managers’ Index (PMI) for the US at 16:00 GMT. For the past month of February, the experts expect a value of 48.0. Although the index determined by the Institute for Supply Management in the USA was 47.4, below the forecast of 48.0, the stock and crypto markets subsequently increased in value. One reason for this was the significant correction in the US dollar index. Because the US Federal Reserve is likely to take into account a sustained negative development in the manufacturing sector in its interest rate decision on March 22nd and could therefore deviate from its continued hawkish stance. On the other hand, a better-than-expected index reading could put renewed pressure on US stock markets as the likelihood of another rate hike should increase further. As a result, risky stocks in particular and with them the Bitcoin price could tend to weaken.
US Service Sector Purchasing Managers Indices
Friday, March 03, 2023: At 16:00 (CET) the ISM purchasing managers’ index (PMI) for the service sector in the USA will be presented. Most recently, the figures published for the Purchasing Managers’ Index for January were 55.2, well above expert expectations of 50.4. As a result, the US dollar index gained significant strength. However, the price declines on the stock and crypto markets were relatively moderate. The market experts are forecasting a slight decline to 54.5 for the month of February. If the forecast is clearly beaten, as it was recently, the US dollar index should continue its bullish recovery and put the stock and crypto market under pressure. The service sector has recently decoupled from other sectors such as manufacturing and real estate and has shown itself to be much more resilient. If, contrary to expectations, the service sector should also weaken, that would be a strong indication that the US economy is cooling down overall. It remains to be seen whether this development will encourage investors to buy shares and cryptocurrencies. However, the US Federal Reserve would paradoxically welcome weakness in the services sector as it would increase the likelihood of falling inflation in the coming months.
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