Interest rates could set the direction for crypto this week, with the Federal Reserve, Bank of England and Bank of Japan all expected to maintain their stances as markets look for signs that rising energy prices have brought further tightening closer.
CME’s FedWatch study shows a 33% chance of a U.S. rate hike, while forecast market odds are at 19%, up from almost nothing at the start of the month. Gregory Daco, chief economist at EY-Parthenon, said September could be the first significant test of the Fed’s position, CBS News reported.
More immediate tests will come on Thursday, with the arrival of second-quarter U.S. GDP and June personal consumption expenditures (PCE). Strong growth accompanied by persistent inflation would reinforce expectations of higher and longer interest rates and put pressure on cryptocurrency prices via higher yields and a stronger dollar, while weaker numbers could end this trade.
All 70 economists polled by Reuters expected the BoE to hold steady at 3.75%, while the BoJ was expected to stay at 1% before potentially raising rates again later this year.
