Table of Contents
Bitcoin ended the trading month above 29,000 US dollars and thus a good 2 percent above the previous week’s closing price. Most of the rest of the crypto market was also able to stabilize further in the middle of the week, despite a temporary relapse. The crypto space followed the recovery of the major US stock indices S&P500 and Nasdaq100. After strong quarterly figures from the Internet giants Microsoft, Alphabet, Meta and Amazon, the US stock market ended the trading week and month with a price increase. Gold and silver also show slight gains in the weekly and monthly comparison. The correlation between Bitcoin and the precious metal gold also rose to a two-year high in light of the bank failures in the USA in the last two trading months. The relevant price levels for Bitcoin can be found in the current price analysis from April 19th.
The following economic data will be relevant this week
With the release of new inflation data from Europe, the first trading week in May will start tomorrow, Tuesday. The next day, the US Federal Reserve announced its latest interest rate decision. In the second half of the week on Thursday afternoon, the European counterpart ECB will follow with its latest interest rate decision for the euro area. On Thursday evening, the most important US technology company Apple published its quarterly figures for the last three trading months after the market closed. The trading week ends with fresh data on the US job market. At the same time, the US Bureau of Labor Statistics presents the monthly labor market report (NFP) and the unemployment rate.
Inflation data for Europe
Tuesday, May 02, 2023: The new number week starts at 11:00 a.m. (CET) with the previously published figures on EU consumer prices for the month of April. In March, the inflation rate in Europe fell again compared to the same point in the previous year at 6.9 percent, but was still well above the key interest rate level of the ECB. At 7.0 percent, this forecast for the trading month of April is again slightly higher. If the inflation rate for April is below the experts’ estimates, a bullish market reaction in the equity and crypto sector can be expected.
If, on the other hand, the inflation data were to be higher than analysts’ expectations, that would put a damper on the European Economic Area. As a result, price reductions are to be planned. Since the core inflation rate recently rose by 0.4 percent to 5.7 percent and was thus well above expert expectations, the pressure on consumer prices is likely to remain high.
Interest rate decision and press conference by the US Federal Reserve
Wednesday, May 03, 2023: At 8:00 p.m. (CET), investors will focus on the interest rate decision by the US Federal Reserve Bank (Fed). According to the latest data from CME FedWatch Tools 83.9 percent of the analysts expect a further increase in interest rates by 25 basis points to 5.25 percent. This development has recently left the US stock market cold. In view of the better than expected quarterly figures from many US companies, investors have so far ignored a further interest rate hike. The market appears to have adjusted to the Fed’s hawkish monetary policy and is turning to other economic data. It remains to be seen how Fed Chairman Powell will react to the FDIC’s emergency intervention at the medium-sized US bank First Republic Bank (FRC) last Friday. Fed Chair Powell remains under pressure given the ongoing problems in the US banking sector and mounting credit crunches.
At Powell’s subsequent press conference at 8:30 p.m. (CET), the journalists are likely to ask critical questions about the future monetary policy of the US monetary authorities and examine his statements regarding possible changes in fiscal policy in detail. A massive increase in market volatility is therefore to be expected, especially during the press conference.
Key rate decision by the European Central Bank
Thursday, May 04, 2023: At 2:15 p.m. (CET), the focus will then be on Europe. The European Central Bank ECB announces its third interest rate decision in 2023. Market participants are expecting a further interest rate step of 0.25 percent to 3.75 percent. In view of the fact that key interest rates are still well below the inflation rate of just under seven percentage points recently, another rate hike is unavoidable. However, since the ECB had recently raised interest rates by 50 basis points several times in order to close the gap, another interest rate hike of 0.50 percent cannot be ruled out. The European currency watchdogs have so far failed to get the inflation problem under control in the long term. Should Ms. Lagarde surprise the market with an interest rate adjustment of 50 basis points, the initial reaction on the stock market in Europe will be negative and prices will correct. However, the euro rate would rise, which would be positive for the Bitcoin rate, as the US dollar index DXY is likely to come under further pressure. As on the previous day, investors will pay particular attention to the statements made by the head of the ECB at the subsequent press conference at 2:45 p.m. (CET). Investors will take a close look at how Lagarde assesses the development of the economic prospects for Europe and what monetary policy measures the ECB is planning in the coming months.
US job market report and US unemployment rate close the trading week
Friday, May 05, 2023: At 14:30 (CET) the Bureau of Labor Statistics presents the latest Non-Farm Employment (NFP) figures for the month of April. Most recently, the numbers have deteriorated slightly and, at 236,000 jobs, were below the expert forecast of 239,000 newly created jobs. For April, the forecast of 180,000 newly created jobs is well below the average for the last trading month. At the beginning of the year, 517,000 new jobs had been created. If the analysts’ expectations are met or even undercut, a price consolidation on the stock market should be planned as an initial reaction, since the danger of a recession in the US economy would become more likely again in the coming months. If, on the other hand, the job data can surprise and the US economy can compensate for the decline in the previous month and, contrary to expectations, create more new jobs than forecast, a sustained positive development in US share prices is conceivable. The crypto market should also benefit from good labor market data.
Also at 2:30 p.m. (CET) the US unemployment rate for the month of April will be announced. The market experts’ estimate is 3.6 percentage points. In March, the unemployment rate fell from 3.6 percent to 3.5 percent, despite fewer new jobs created outside of agriculture. It is uncertain whether this fall, after an unexpected rise in February, is only temporary. Continued weakness in the real estate and construction sectors, as well as the increasing wave of layoffs in the technology sector, would be a possible catalyst for an increase in the unemployment rate. A weak NFP job market report would also be an additional indication that economic growth in the USA is weakening and that the number of unemployed is likely to continue to rise in the coming months. Fed Chairman Powell had already emphasized that a possible US recession could also push the unemployment rate towards 4.5 percent. The US stock markets are likely to take this negatively, since consumer behavior in the USA is also likely to weaken in the medium term. If, on the other hand, the unemployment rate stays at the previous low level, this would speak for continued resilience of the US economy, as it has done recently. Investors are likely to reward the unchanged strength, which should result in increased purchases. The crypto market could also continue to rise as a result.