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The key crypto currency Bitcoin and with it the majority of the entire crypto market continued to expand their price losses of the previous week in the past week. While the world’s largest stock index, the S&P 500, started a major recovery in the second half of the week, the Bitcoin price came under more pressure after negative news about the US crypto bank Silvergate and corrected back to $22,000 for a short time before stabilizing. The largest long liquidation this trading year, worth $62 million, pushed BTC down 5 percent in a matter of hours. Despite a US dollar index (DXY) also trending weaker, the crypto market isolated itself from the US stock market.
The following economic data will be relevant this week
On Tuesday, March 7th, Fed Chair Jerome Powell will speak about the US economic outlook. In the middle of the week, the Fed chairman steps in front of the microphones again. At the same time, the Bureau of Labor Statistics publishes the latest JOLTs job report. In the early Thursday morning, the National Bureau of Statistics in China published the current consumer and producer prices for the People’s Republic. On the last trading day of the week, the major US job market report (NFP) and the current unemployment figures for the USA will be published.
Fed Chair Powell’s press conference in focus
Tuesday, March 07, 2023: At 4:00 p.m. (CET), market players will look at the latest statements from the Chairman of the Federal Reserve. They expect new insights into the monetary policy direction of the Fed when the next interest rate decision is made on March 22nd. Any implication from Powell about a change in direction should move markets. Due to the renewed increase in inflation rates, the Fed head is likely to continue to view a recession as inevitable.
Jerome Powell and JOLT’s midweek job report
Wednesday, March 08, 2023: At 4:00 p.m. (CET), Fed Chairman Powell will appear in front of the microphones again and could once again specify his statements from the previous day. It remains to be seen whether Powell will address possible further measures by the Federal Reserve to tackle the inflation problem. Traditionally, the US stock market, like the crypto sector, has been sensitive to any new comments from the Fed chair. At the same time, the JOLTS jobs report for the month of February will be presented by the Bureau of Labor Statistics. The current estimate is 10.60 million vacancies. In the previous calculation period, the number of vacancies was 11.01 million. If the number of vacancies is below expectations, this indicates an economic slowdown. A deterioration in the job market would increase the likelihood of an economic downturn in the US. A weak JOLTS report could lead to renewed price setbacks on the US stock indices and thus put prices on the crypto market under further pressure. However, should US companies create more new jobs, as in the previous month, and thus underpin the strength of the US economy, this could result in rising prices on the financial market, as was the case on February 1st. Recently, the market has trended positive on strong jobs data in the US.
Consumer and producer prices from China
Thursday, March 09, 2023: At 02:30 (CET) the People’s Republic publishes new inflation data for the month of February. In a monthly comparison, a slight increase in consumer prices by 0.1 percent to 0.8 percent is expected. If consumer prices in China turn out to be higher than the forecasts, as in the previous month, the Chinese central bank PBOC could also reconsider its loose monetary policy to stimulate the economy. For producers, the analysts expect a decline of -0.5 percentage points. Most recently, producer prices fell by -0.8 percent in a monthly comparison, even more than the expert forecast of -0.5 percent. However, considering the restart of the Chinese economy after the zero-Covid policy change, such a sharp drop is considered unlikely. The government in Beijing will do everything possible not to stifle its own economy. Therefore, as always, the figures presented should be treated with caution. Looking ahead, however, rising consumer and producer prices should also force the PBOC to act.
Latest employment report and the US unemployment rate at the end of the week
Friday, March 10, 2023: At 14:30 (CET) the updated non-farm payrolls (NFP) figures for the US for the month of February will be presented. After 517,000 new jobs were created in January, the market experts expect 200,000 new jobs for the past reporting period. If the forecast is met or even undercut, the assumption of the market experts will be confirmed that the strong number of the previous month is due to a distorted one-off effect due to the re-employment of many employees in the public sector. Weak labor market data could subsequently have a negative impact on prices on the financial markets. If, on the other hand, the resilience of the US job market is confirmed and analysts’ expectations are beaten again, a positive price development on the financial markets can be expected. The probability of a recession would thus decrease further.
Also at 2:30 p.m. (CET) the unemployment rate for the USA will be published. The forecast remains unchanged at 3.4 percentage points. Weak NFP figures are likely to have a negative impact on the unemployment rate, which recently fell by 0.1 percent to 3.4 percent. The unemployment rate is likely to rise back to December levels. On the other hand, if the percentage of people without work decreases again, investors should reward this. However, since the US dollar should also continue to rise as a result, this could act as a renewed headwind on the Bitcoin price.