Despite inconsistent economic data from China, the European Union and the USA in the previous week, as well as ongoing uncertainty after the insolvency of the crypto exchange FTX, the key crypto currency Bitcoin (BTC) in particular was able to hold its own relatively well. Overall, the economic figures continue to show the trend towards relative strength in the US economy, while the rest of the world continues to weaken and is struggling with the effects of persistently high inflation on companies and private households. While the increases in consumer and producer prices in the USA have recently risen less sharply than expected by market experts, at least temporarily, Europe in particular still has to nibble at high, further increasing inflation rates above analyst forecasts and worsening economic expectations. In this trading week, market participants can expect a whole bundle of important key figures that are likely to have a relevant impact on all sectors of the financial markets worldwide. The interpretation of the new economic data, especially in the middle of the week, thus plays a central role in the direction of the stock and crypto market. In addition, news about the status of the Digital Currency Group (DCG), which in turn is the parent company of the Grayscale Bitcoin Fund and the crypto trading and lending platform Genesis, should lead to a revaluation of the crypto market and thus also to adjusted price forecasts for Bitcoin and Co.
German producer prices at the start of the week
Monday, November 21, 2022: At 08:00 a.m. (CET), market participants are looking at the development of producer prices (PPI) in the largest and most important economy in the euro zone. The experts are forecasting a decline from 2.3 percent in September to 0.9 percent in October. Should the price increases actually fall so significantly below one percentage point, there would be a light at the end of the tunnel after months of significant increases in producer prices and would be the first indication of a temporary calming down for German companies. Such a development should encourage investors to believe that price explosions could also have peaked in Europe. As a result, a recovery of the euro against the US dollar is to be planned, which could also indirectly have a supportive effect on the crypto market.
If, on the other hand, the producer price index for Germany is above the reduced analysts’ expectations of 0.9 percent, a renewed strengthening of the US dollar is conceivable. As in previous months, sustained dollar strength could result in increased selling pressure on the stock and crypto markets.
PMIs in Europe and US new orders and building permits midweek
Wednesday, November 23, 2022: This trading day is packed with relevant market data. In addition to early releases of the purchasing managers’ indices for the manufacturing and service sectors in various European countries and the overall indices for the euro zone in the morning hours, investors are primarily looking at a wide range of economic data from the USA in the afternoon. In addition to the number of building permits issued at 2:00 p.m. (CET), the core rate for incoming orders for durable goods at 2:30 p.m. (CET) comes into focus. After a decrease of -0.5 percentage points in the last underlying period September, the market experts expect a recovery of +0.1 percent for October. Once again, however, this positive news in the market could lead to price consolidations in the stock and crypto sector, as it would give the US Federal Reserve more room for its plans for further interest rate hikes. The US dollar could then have ended its correction of the previous weeks for the time being, which should further increase the pressure on speculative assets such as the crypto reserve currency.
US consumer expectations and FOMC interest rate log close the eventful trading day
At 4:00 p.m. (CET) the latest survey results from the University of Michigan on inflation expectations of US consumers in the next five years will be presented. If private households assume that inflation will remain high until 2027, this would be an indication of a possible reluctance to consume on the part of US households. In view of the hawkish stance at the last press conference on November 3, it is doubtful whether the Fed, headed by Jerome Powell, will then be able to immediately bring about new monetary relief packages. The publication of the FOMC minutes of the last central bank meeting on Wednesday evening at 8:00 p.m. (CET) should provide further indications of the monetary policy orientation of the US central bank with regard to the forthcoming interest rate decision by the Fed. Investors hope that the minutes will give them new information about possible monetary policy adjustments by Fed Chair Jerome Powell when the next interest rate decision is planned in December.
Release of ECB minutes provides insight into European Central Bank position
Thursday, November 24: At 1:30 p.m. (CET), the top monetary watchdogs in the euro zone will then present the transcript of the last central bank meeting on October 27. Similar to the day before, media houses and market observers will try to distill conclusions about future monetary policy in Europe from the minutes of the previous ECB meeting. Any indication of a sustained expansion of monetary policy countermeasures aimed at combating inflation in the euro area could result in renewed price corrections in the European share indices. If, on the other hand, reasons are found for a less tough stance on the part of Ms. Lagarde and the other monetary watchdogs, a slight recovery movement cannot be ruled out. Investors are currently clinging to any indication of a less restrictive monetary policy by the central banks.