As in the week before, the BTC price and the US stock indices developed bullish again and ended the trading week in the range of the weekly highs. Despite worse-than-expected quarterly figures and cautious company prospects for the final quarter at the large technology groups Alphabet, Microsoft and especially META and Amazon, all of which corrected double-digit prices, Apple again saved the major US stock indices from a major price correction. Apple’s unexpectedly strong price increase of seven percentage points on Friday and rising share prices of the US oil companies Exxon and Chevron even led to the best weekly performance in the Dow Jones in recent trading months. The clear sell-off at Meta, with a 25 percent drop in price, and at Amazon, with a 21 percent value correction, were more than compensated for. The ongoing correction in the US dollar index DXY ensured a positive price development, especially in the crypto sector. Also worth mentioning here is Elon Musk’s completed acquisition of the social media platform Twitter, which catapulted the meme coin Dogecoin north by a remarkable 150 percent.
In the current trading week, the market players are now primarily looking at the key interest rate decisions of the US Federal Reserve (FED) and the Bank of England (BOE) in the middle of the week.
US purchasing managers’ indices in focus
Tuesday 1 November: At 15:00 (CET) investors will look to the release of the ISM Manufacturing Purchasing Managers’ Index (PMI) for the US. The analysts forecast a value of 49.9 for the final figures in October. The expectations are again below those of the previous month. In September, the index still showed a value of 50.9. Paradoxically, another weak purchasing manager indices would be positive for BTC and Co., since these usually have a negative effect on the exchange rate development of the US dollar. As a result, the crypto sector could continue to gain ground on Tuesday. Whether the Fed will then deviate from its rumored interest rate hike of 0.75 percent will become apparent at the Fed meeting on the following day.
Interest rate decision and press conference by the US Federal Reserve
Wednesday, November 2nd: At 7:00 p.m. (CET), the financial world is watching the interest rate decision by the Federal Reserve Bank. The market experts expect the US monetary authorities to raise the base rate by 75 basis points to 4.0 percent. Since the US core inflation rate published last Friday at +0.5 percent month-on-month was again above analysts’ expectations of +0.4 percent, the Fed is likely to be forced to raise interest rates further significantly.
Should the interest rate step amount to 75 basis points or more, as was the case with the last interest rate adjustment in September, a further sell-off in the stock market should be planned for. To what extent BTC and Co. can evade this trend is difficult to say. Although the DXY is likely to be bullish in an initial reaction, the resilience of the crypto sector over the past few weeks gives at least some hope. Another unknown are the midterm elections in the USA on November 8th. Should Fed boss Jerome Powell give the Democrats, around US President Joe Biden, an early election gift and raise interest rates by just 50 basis points, a price rally on the financial markets cannot be ruled out. Investors will therefore pay particular attention to the subsequent press conference at 7:30 p.m. (CET). Experts will analyze Powell’s assessments of the economic situation and monetary policy developments in the coming months in order to derive possible indications of a change in fiscal policy orientation in future interest rate decisions.
BOE interest rate decision and US purchasing managers’ index in the service sector
Thursday, November 3rd: At 1:00 p.m. (CET), market participants first look to London. The Bank of England announces its latest rate hike. With inflation in the UK in double digits, analysts are expecting it to rise by a further 0.75 percent. Should the British currency watchdog raise the key interest rate by at least 75 basis points, this could allow the US dollar index DXY to consolidate somewhat in the short term. Expect a massive spike in volatility in the FX market surrounding the GBP-USD trading pair.
At 3:00 p.m. (CET), the Institute for Supply Management in the USA will then present the results for the purchasing managers’ index in the service sector. Here, the market experts are forecasting a fall back to 55.4 after a value of 56.9 in September. BTC and Co. could benefit from a weaker purchasing managers’ index, as this usually has a negative impact on the US dollar exchange rate.
Labor market report and unemployment figures at the end of the week
Friday 4 November: On the last day of the first week of trading at 13:30 (CET) the latest non-farm payrolls figures for the US for the month of October will be presented. The data on the so-called Nonfarm Payrolls (NFP) describe the monthly change in the number of employees minus the number of employees in agriculture. Increasing job growth is considered an indication of an improvement in the labor market and the associated increase in consumer spending. If, on the other hand, job growth corrects, this is an important indication of increasing problems on the labor market.
On the other hand, declining job growth has a negative impact on future consumer spending and further exacerbates the economic downturn. The forecast for the month of October is 200,000 employees. Compared to the previous month (288,000), the forecasts in October are further down. Weak NFP numbers could amplify the US dollar correction, which should have a stabilizing effect on the BTC price. In addition, the Fed could take this into account at the last central bank meeting in December and possibly increase the key interest rate less sharply in order not to further choke off the labor market. Also at 13:30 (CET) the unemployment rate for the USA for October will be announced. Adjusted for the unemployment figures, which recently fell by 0.2 percent to 3.5 percent, the forecast for October is 3.6 percent. Despite an increase in the unemployment rate, it would remain at a relatively low level. As long as this remains well below 4.0 percent, the Fed still has room for improvement with regard to the ALG ratio, especially since Powell had already forecast an increase as likely in the last press conference.