Two US data releases caught the markets’ attention this week.
They came just a few days apart, with very different effects.
Let me explain.
For my technical analysis of the week, with more of a trading focus, head here:
The US jobs report
The US jobs report was released on Wednesday 11 February.
Here’s what the numbers tell us:
- 130,000 jobs were created in January, well above expectations
- The unemployment rate fell to 4.3%
You’re probably wondering why I’m talking about American jobs when we don’t even live there.
I get it. These statistics don’t exactly thrill me either...
Except they have a direct impact on the global economy!
A strong jobs market means the economy is holding up.
And in that situation, the Fed has less reason to cut interest rates quickly.
So investors adjusted their expectations: the Fed probably won’t cut rates just yet.
Assets like Bitcoin often react quickly to that.
For those of us interested in trading and finance more broadly, it’s important information to keep in mind.
The US CPI release
Two days later, on Thursday 13 February, the Consumer Price Index (CPI) release changed the picture.
CPI measures changes in the prices consumers pay for everyday goods and services: food, fuel, rent and so on.
It’s the benchmark indicator for tracking inflation in the country.
What the numbers tell us
- CPI rose 0.2% in January, against expectations of 0.3%
- Annual inflation reached 2.4%, down from 2.7% in December
The Fed aims to keep annual inflation around 2% and uses this indicator to help set its policy rates.
At 2.4%, inflation is still slightly above that target, but it continues to slow.
These figures give the Fed more room to consider rate cuts in the coming months.
Markets reacted straight away. Bitcoin, for example, rose from around $67,500 to $70,000 after the release.
Sources: US CPI release, US employment release