Key facts
- August PPI data is expected to show a 0.3% monthly increase, with core PPI rising 0.2%.
- August CPI is forecast at 3.4% year-over-year, with monthly increase of 0.4%.
- Core CPI is projected to decline 0.2% monthly and 2.4% annually.
- The CME FedWatch tool indicates a 60.5% chance of a Fed rate hike to 3.75%-4.00% on September 16.
- U.S. Treasury buybacks this week total $14.5 billion, including $12.5 billion on September 9 and $2 billion on September 10.
The cryptocurrency market is anticipating a significant week driven by macroeconomic data releases and central bank policy decisions. Key events include the release of U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) inflation reports for August, alongside U.S. Treasury buybacks, all preceding the Federal Reserve's Federal Open Market Committee (FOMC) meeting on September 15-16.
The PPI data, due September 10, is forecasted to show a 0.3% monthly increase, with core PPI expected to rise by 0.2%. Initial jobless claims are also anticipated for the same day, with consensus estimates at 209,000. On September 11, the CPI report is expected to reveal a 3.4% year-over-year inflation rate and a 0.4% monthly increase, while core CPI is projected to decline by 0.2% monthly and 2.4% annually.
These inflation figures are the last significant data points before the Fed's policy decision. Hotter-than-expected inflation or strong labor market data could lead to tighter monetary policy and higher Treasury yields, negatively impacting crypto assets. Conversely, softer inflation readings might alleviate pressure on risk assets.
The CME FedWatch tool suggests a 60.5% probability of the Federal Reserve raising its target interest rate to the 3.75%-4.00% range at the September meeting, with a 39.5% chance of rates remaining at 3.50%-3.75%. This outlook leans hawkish and could weigh on the crypto market.
Adding another layer of liquidity dynamics, the U.S. Treasury is set to conduct $14.5 billion in debt buybacks this week. This includes $12.5 billion in cash management buybacks on September 9 and $2 billion in liquidity support buybacks on September 10. Treasury buybacks aim to enhance liquidity in the bond market by returning cash to investors, which can potentially increase market liquidity and appetite for risk assets like Bitcoin and other cryptocurrencies.
In addition to these U.S.-centric events, the European Central Bank's policy decision is also on the calendar, contributing to expected volatility across crypto markets.