The previous business week ended with a bit of a surprise as the jobs report showed that the US economy had lost 23,000 jobs in July, compared to expectations for roughly 80,000 new positions.

Previous months were revised sharply lower as well, solidifying the argument that the labor market is finally weakening. Although this was initially interpreted as good news for risk assets since a softer economy gives the Fed less reason to tighten monetary policy further, one big obstacle remains, and more light will be shed on it this week.

Inflation Week

The analysts at The Kobeissi Letter described the coming five days as another ‘big week’ for economic data, with July’s CPI and PPI reports getting the most attention. They will be announced on Wednesday and Thursday, respectively, followed by retail sales and consumer sentiment on Friday.

Wednesday’s Consumer Price Index (CPI) report is undoubtedly the main event, especially since last month’s showed a substantial decline. However, it was probably misleading since it was based on lowered energy costs due to the de-escalation of the Middle East war, which has since deteriorated.

Although Friday’s employment report tilted the monetary policy equation toward a no-hike event, another hot inflation reading could quickly reverse the narrative. As usual, a cooler July CPI report could lead to a BTC and altcoin rally due to reduced expectations for a rate hike, and vice versa.

The PPI reading on Thursday will provide another look at inflation, but from a producer’s side. It’s typically less influential than CPI, but a significant upside surprise could reinforce concerns that price pressures remain high.

Friday’s July retail sales could be the dark horse, as stronger consumer spending would demonstrate that the US economy remains resilient despite the weak employment figures. On the surface, this sounds positive, but it could give the Fed another reason to maintain restrictive monetary policy given the current environment.

In contrast, a weak retail sales reading would strengthen the narrative that the economy is slowing, potentially reducing the requirement for additional rate hikes.

War Moves

The previous week was also quite eventful, leading to substantial volatility for BTC, which dropped to a monthly low of $62,200 before jumping by over $3,000 at the end of the week. One factor that wasn’t mentioned in the report above is the war against Iran.

Any significant moves in that direction tend to severely impact the crypto market (as well as other financial markets). The promise of a deal from last week brought some hope, but the failure erased it. The latest reports claim that Trump has undertaken a new strategy by “low-keying it with Iran.” According to Axios, he is preparing to allow economic pressure to mount as opposed to ordering a new military offensive.

For now, bitcoin remains sideways at around $65,000 after little to no fluctuations over the past 48 hours.

Source: CryptoPotato