US economic indicators provided support ahead of the Fed
After a reversal on Monday, investor sentiment shifted to the US economic calendar on Tuesday. Soft inflation indicators supported a bullish Nasdaq session, considering inflation and the Federal Reserve’s labor market conditions.
The labor cost index rose 1.0% in the fourth quarter, which came off the 1.2% increase in the third quarter, with employee wages rising 1.0% compared to 1.3% in the third quarter. Inflation indicators attracted more attention than an unexpected drop in consumer confidence. CB Consumer Confidence fell from 109.0 to 107.1 in January.
With investors focusing on the Federal Reserve, news from the cryptocurrency market fell for a second session, leaving US economic indicators and the Nasdaq to guide Bitcoin and the broader crypto market.
On Tuesday, the Nasdaq rose 1.67% to end its best performance in January since 2001.
Today, the US economic calendar will be in focus. Changes in US jobs and JOLT vacancies will attract interest early in the US session. After the stats from Tuesday, the weak numbers may soften what is being said about Fed Chair Powell’s hawkish press conference.
Late in the session, the Fed will make its first interest rate decision of the year. Markets expect a rate hike of 25 basis points. However, there is uncertainty surrounding Fed Chair Powell’s press conference. High inflation and tightening labor market conditions may force Powell to hold another hawkish press conference.
Talk of having to raise interest rates to tackle high inflation at the expense of the US economy will carry weight. However, Powell may indicate that the Fed’s efforts are having the necessary effect and that the Fed may take a less aggressive rate path, which could support BTC’s bullish response.
While the focus will be on the Fed, investors should continue to monitor cryptocurrency news. SEC v Ripple, FTX, and Genesis updates should be considered, along with talk from US lawmakers and regulators.