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Incoming volatility? 3 things to watch out for this week
The cryptocurrency market has faltered in rather uncharacteristic fashion over the past few days, but all that may change this week as there are several major events and announcements from the world's largest economy. It begins with the Federal Reserve Chairman's testimony before Congress and extends to jobless claims and the unemployment rate. Powell as a witness The Federal Reserve reversed its monetary policy after the COVID-19 pandemic began to subside and began raising interest rates quite aggressively to combat runaway inflation. The past FOMC meetings have all resulted in interest rate hikes, some by 75 basis points. However, the Fed slowed...
Incoming volatility? 3 things to watch out for this week
The cryptocurrency market has faltered in rather uncharacteristic fashion over the past few days, but all that may change this week as there are several major events and announcements from the world's largest economy.
It begins with the Federal Reserve Chairman's testimony before Congress and extends to jobless claims and the unemployment rate.
Powell as a witness
The Federal Reserve reversed its monetary policy after the COVID-19 pandemic began to subside and began raising interest rates quite aggressively to combat runaway inflation. The past FOMC meetings have all resulted in interest rate hikes, some by 75 basis points. However, the Fed slowed at the end of 2022, and the start of the new year brought similar sentiment.
Fed Chairman Jerome Powell will head to Capitol Hill on Tuesday and Wednesday to make two separate statements about the central bank's future monetary policy. Most experts believe Powell will only double the bank's plans to raise interest rates by 25 basis points, as it has done recently.
Others claimed that the Fed would not raise interest rates to 6% as previously feared. Nevertheless, most financial markets, including the highly volatile crypto space, have calmed down as they await the results of the two meetings. Even the dollar has felt the consequences with a small dip.
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Unemployment Claims
The U.S. is scheduled to release the latest jobless claims data on Thursday, a day after Powell's second statement. This is a weekly report from the U.S. Department of Labor that shows the number of people applying for unemployment insurance benefits.
It consists of two different types of claims – initial and subsequent claims. The former shows the number of people who submitted for the first time, while the latter is those who have done so at least once before.
As an important indicator of current economic conditions, jobless claims typically result in low volatility in stock markets as well as crypto, especially when they come in higher than expected. Riskier assets like cryptocurrencies tend to decline in such cases.
Unemployment rate and Fed budget
Friday will shed more light on the US economy, with the unemployment rate coming in at 8:30 a.m. EST. Estimates suggest the percentage will remain the same as last month at 3.4%, the lowest since 1969. Further expectations for the jobs report suggest that the US added around 200,000 jobs in February, a notable decline from 500,000 in January.
The Federal Reserve's budget closes for the week at 2:00 p.m. EST, showing spending and revenue in the world's largest economy. The government previously approved the $1.7 trillion budget for 2023, with the $45 billion allocated to Ukraine raising concerns.
Looking at it from a crypto market perspective, all of the above factors seem to be potential catalysts for the upcoming price volatility, especially given the stagnant price movements of the last few days. Such rare occasions are generally followed by large price movements.
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