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The global financial market is looking forward to the announcement of key interest rates by the US Federal Reserve in the middle of the week. While the key crypto currency BTC was able to recover to the US$ 24,200 mark in the previous week despite mostly weak economic data, the BTC price slipped back to the important support area of US$ 21,800 at the beginning of the week. In addition to the interest rate decision and relevant economic data such as the gross domestic product (GDP) of the USA and the consumer price index (CPI) for the euro zone, investors are again focusing on the quarterly figures of large US technology companies such as Meta and Alphabet this week.
Whether the positive price development of the previous week will continue in this trading week will again depend to a large extent on key economic data in the current trading week. You can read below which dates could influence the prices of BTC and Co. in this trading week.
Important company figures in focus
With Microsoft and Alphabet, the reporting season will start in full force tomorrow, Tuesday. The quarterly figures of the two technology giants provide valuable information about the current demand in the field of information technology. In particular, the outlook for upcoming company figures in the second half of the year should provide information about future global economic developments. Mark Zuckerberg’s Meta group opens its books to investors in the middle of the week. Here, too, investors are hoping for new insights into the extent of advertising placed on the company’s various social media platforms. Amazon’s quarterly figures will follow on Thursday. Declining sales at the largest online retailer would also point to an ongoing economic downturn.
Relevant fundamentals to start the week
The data stream begins tomorrow, Tuesday, July 26 at 4:00 p.m. (CET) with fresh figures on CB consumer confidence in the US. Consumer confidence reflects consumers’ optimism about economic development in the USA. The forecast for the month of July is 97.2, again lower than the previous month. In the previous month of June, consumer confidence was 98.7 below the forecast of 100.4. If the analysts’ expectations are missed again, this will confirm the economic downturn in the USA. This development is likely to bring the Fed back onto the scene.
US Federal Reserve interest rate decision midweek
The Fed’s interest rate decision will be announced on Wednesday, July 27 at 20:00 (CET). Most analysts expect interest rates to rise by 75 basis points to 2.50 percentage points. Due to a recent significant increase in the inflation rate of 9.1 percentage points in June, some important players now even consider an interest rate hike of 100 to 125 basis points to be justified. The FOMC statement published at the same time also provides valuable information on the economic and financial situation in the USA.
Fed Chair Jerome Powell’s press conference will follow at 8:30 p.m. (CET). Mr. Powell answers journalists’ questions about the Federal Reserve’s fiscal policies.
US gross domestic product figures for the second quarter
The following Thursday, July 28, at 2:30 p.m. (CET) will be followed by data on the US gross domestic product (GDP) for the second quarter of 2022. Gross domestic product (GDP) is the most important economic indicator and describes the sum of the in the Goods and services manufactured in the USA less the advance services rendered. The GDP can be used to draw conclusions about the current economic strength of a country. The experts are expecting an increase of 0.5 percentage points; in the previous month, GDP in the USA was -1.6 percent below investor forecasts. If analyst estimates are missed again this month and GDP shrinks again, the US is in a recession according to the prevailing definition. The Fed would then probably have to adapt its current interest rate policy to this situation faster than desired.
EU consumer prices and core PCE to close the week
On Friday, July 29, at 11:00 a.m. (CET), the consumer price index (CPI) for the month of July for the euro zone will be published first. Market participants are forecasting a year-on-year increase of 8.6 percentage points. The consumer price index was already at 8.6 percent in June. If the expert estimates are even exceeded this month, the pressure on the European Central Bank (ECB) will increase further. When the next interest rate decision is made in September, ECB boss Lagarde could again be forced to raise the key interest rate more significantly than market participants are currently assuming.
In the afternoon at 4:00 p.m. (CET) the announcement of the core PCE rate in the USA for the month of June will follow. An increase of 0.5 percentage points compared to the previous month is expected. The core personal consumption expenditure (PCE) rate describes the change in the prices of goods and services that US consumers bought during the reporting period. The prices considered in this price index exclude food and energy costs. Changes in the core PCE rate indicate whether there is a persistent risk of inflation or whether the peak has been reached for the time being. For the US Federal Reserve, price pressure is a preferred measure for assessing the risk of inflation in the US. If the core rate of private consumer spending exceeds forecasts, the US dollar can be expected to continue to rise. As expected, this should tend to have a negative effect on the development of the BTC price.