US PCE Inflation Revealed: What’s the Significance for Bitcoin Price?

• The US Bureau of Economic Analysis has released the Personal Consumption Expenditures (PCE) inflation data for September. The annual PCE inflation, following a 3.5% increase last month, came in at 3.4%, aligning with market forecasts.
• COINOTAG had previously reported that Wall Street predictions tended to align with market sentiment, often responding to the impact of the Israel-Hamas conflict on energy prices.
• With concerns about the Middle East conflict subsiding, a decline in oil prices is anticipated. Additionally, the US Dollar Index (DXY) remains volatile.

Today, the US Bureau of Economic Analysis disclosed the PCE inflation data for September. Why is this data so crucial for the markets?

US PCE Data Released Today

Today, the US Bureau of Economic Analysis released the Personal Consumption Expenditures (PCE) inflation data for September. The annual PCE inflation, following a 3.5% increase last month, came in at 3.4%, aligning with market forecasts. Furthermore, the annual inflation of core PCE, which the Federal Reserve prefers to measure inflation, dropped from last month’s 3.9% to 3.7%. However, core PCE increased by a higher than expected 0.4% on a monthly basis, rising from 0.1% the previous month.

The September PCE inflation data indicates that inflation pressures are still gradually moderating, but rates still exceed the Fed’s 2% target. Fed Chairman Jerome Powell stated that the Fed is proceeding cautiously and that the tightening of monetary policy depends on incoming data. PCE and CPI data indicate a slowdown in inflation, but Powell is concerned about a tightening labor market.

COINOTAG had previously reported that Wall Street forecasts generally conformed to market sentiment in response to the impact of the Israel-Hamas conflict on energy prices. Markets will continue to remain volatile due to businesses gaining access to complex earnings results and strong 4.9% US GDP growth.

Moreover, personal spending in the United States increased by 0.7% in September 2023 compared to the previous month. This exceeded the market forecast of a 0.5% increase, surpassing August’s 0.4% increase.

US stock futures rose on Friday after two consecutive sessions of market sell-offs. The decline in oil prices is expected as concerns over the Middle East conflict subside. The US Dollar Index (DXY) remains volatile, hovering around 106.52.

Bitcoin May Rise as PCE Inflation Slows

As PCE inflation slows down, Bitcoin and Ethereum may continue to rise. The BTC price has mostly traded sideways with low trading volume. The low and high prices in the last 24 hours were $33,762 and $34,774, respectively.

In a recent post, popular trader Skew mentioned that a 25-basis point rate hike by the Fed is expected by the end of the year to rein in inflation and adopt a dovish approach.

“The PCE release basically tells you the economy is still feeling inflation pressures, especially around services and wages (labor and spending on goods and services), but over time, it’s still tracking lower inflation.”

On the other hand, ETH is trading around $1,800, and its price currently stands at $1,795. Traders remain cautious due to the end of Friday’s futures expiration.