The Fed has had a significant influence on the world financial market since 2022, when it raised interest rates continuously, intending to control U.S. inflation at an alarming rate in 2022. After a year of massive interest rate hikes, the market expects that the Fed will be more lenient in 2023, and the Fed Chairman's speech will be the direction for the market in the next period.
Fed Chair Speech
Following a lackluster start to earnings season, investors are expected to wait for Federal Reserve Chairman Jerome Powell's address to the Economic Club in Washington, D.C., on February 8, 2023, before making any significant changes. Jerome Powell's speech will have a considerable impact on the financial markets, and his policy will be the next trend in the movement of the traditional and cryptocurrency markets.
Following last week's surprisingly positive U.S. employment data, the likelihood of more Federal Reserve raises fund rates has grown. The robust U.S. labor statistics announced last Friday have significant implications for Fed policy, confirming that the Fed will need to hike rates for longer than optimistic market scenarios had factored in. Nonfarm payrolls climbed by 517,000 in January, above the Dow Jones forecast of 187,000, while the unemployment rate decreased to 3.4%, compared to the prediction of 3.6%. That is the lowest level of unemployment since May 1969.
The market expects that the Fed Chairman will reveal the following monetary tightening policy of the Fed after the U.S. labor market has very positive data. According to CME Group statistics, traders upped their bets on the Fed, raising interest rates by a quarter percentage point at its March meeting, with the chance jumping to 94.5%. They also anticipate another hike in May or June, bringing the central bank's benchmark funds rate to a target range of 5%-5.25%.
Initial Jobless Claims
A day after the Fed Chairman's speech, the U.S. Department of Labor also announced the application for unemployment benefits at 20:30 (GMT+7). Applications for unemployment benefits are based on the number of people applying for unemployment insurance. Predict the number of jobless claims is 190k - 183k higher than last. In the scenario, the number of jobless claims is more elevated than predicted at 190k - DXY will decrease, and BTC will increase. Conversely, if the number of jobless claims is lower than predicted - DXY will increase, and BTC will drop.
Over the past few days, BTC traded sideways in the 22k7-23k5 zone after correcting from the 24k2 peak of the mini-uptrend. To continue to grow, BTC needs to make a new top at 24k3 and a critical area at 25k2. At the time of writing, BTC is trading around 23k with a 24-hour trading volume of nearly $25 billion. Predict that at the time of the Fed President's speech, BTC price will no longer be sideways and determine the direction of BTC in the short term.
Reviews And Summary
The whole market will be waiting for a statement from the Fed to determine the market trend between now and the rate hike meeting in March. For crypto investors, waiting for the Fed's crypto tightening policy to react is necessary to correspond with BTC to determine the trend of BTC mini uptrend or will correct to the 20k-21k area. Besides, the market is expected to have a recovery to the 25k zone from now to the next interest rate hike.
In addition, the U.S. labor market data can show that the Fed has a pretty good monetary tightening policy to reduce the unemployment rate to the lowest since 1969. That is a stepping stone for the U.S. economy to gradually recover and no longer raise interest rates like in 2022 and 2023.
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