This week's US inflation report is expected to shake up the cryptocurrency market

Cryptocurrency markets were flat over the weekend following last week's decline, with total market capitalization falling to $2.38 trillion.

This week's economic calendar could spark further volatility as key inflation data is released along with several speeches from the Federal Reserve that could signal the direction of monetary policy going forward.

Economic Calendar

On Tuesday, the core PPI (Producer Price Index) report will be released, which reflects input prices for producers and manufacturers, measures the cost of producing consumer goods and directly impacts retail prices.

This is seen as a harbinger of inflationary pressures and is a leading indicator for the following month's CPI (Consumer Price Index) report.

Key events this week:

1. April Producer Price Index (PPI) Inflation Data – Tuesday

2. Fed Chairman Powell's speech – Tuesday

3. April CPI Inflation Data – Wednesday

4. April Retail Sales Data – Wednesday

5. Philadelphia Fed Manufacturing Data – Thursday

6. A total of 12 Fed speaker events are taking place this week.

— Kobeissi Letter (@KobeissiLetter) May 12, 2024

The April Core CPI report is due out on Wednesday and is one of two main measures used to measure inflation, the other being personal consumption expenditures (PCE).

The CPI directly shapes price trends in the economy, consumer spending, and business prospects, and also directly influences the Federal Reserve's interest rate decisions.

“If CPI inflation rises again this week, it will mark the third consecutive month of increases,” the Kobeisi letter noted.

A total of 12 Federal Reserve speaking events are scheduled this week, including one from Chairman Jerome Powell on Tuesday.

A majority of U.S. CEOs expect the Fed to cut interest rates just once this year, according to a Conference Board survey of CEO expectations conducted last week.

Of the 136 CEOs surveyed, 31% said they would not see any rate cuts this year, while 26% expect two cuts. “Meanwhile, the market is pricing in two rate cuts this year as a base case, with the first coming in September.” Reported Kobeishi.

Interestingly, Elon Musk criticized the Fed over the weekend by comparing it to the board game Monopoly, specifically referring to a section of the game's rules regarding banks that says they can never go bankrupt and can print new money if they need to.

How the Federal Reserve Works pic.twitter.com/3rRhbBfcJe

— Elon Musk (@elonmusk) May 11, 2024

Cryptocurrency Market Outlook

Cryptocurrency markets in Asia remained subdued on Monday morning, with most major currencies seeing little movement.

Bitcoin prices were trading at around $61,000 at press time, roughly the same as yesterday, but down 4.3% compared to the same time last week.

Ethereum has not been able to recover since dropping below $3,000 on May 10 and remains in a short-term bearish mode at $2,900 as of press time.

Altcoins were mostly in the red, with Solana, Dogecoin, Avalanche, and Nia Protocol seeing major losses.