This week I’m focusing on two U.S. inflation data releases: August PPI will be published on Thursday at 20:30, and August CPI will be published on Friday at 20:30.$BTC I’ll trade as usual tonight, but since the U.S. stock market is closed for Labor Day, I’m only treating this volatility as the market’s action at the start of the data week—I won’t pre-emptively set the direction for the whole week.
First, the PPI provides price signals to the production side; then the CPI is used to gauge consumer-side inflation. The two sets of data are only a day apart. I’ll treat Thursday as the first round of observation, and Friday as the key confirmation. Once the PPI is released, I update my views and positions all at once—essentially answering one piece of information with the next, back-to-back. I don’t do trades like that.
When looking at CPI, I won’t just focus on the headline year-over-year figure. YoY tells you where things are relative to a year ago, while the month-over-month rate is closer to the change in the most recent month. Headline data can be heavily influenced by food and energy, while core data helps determine whether broader price pressures have any persistence. If overall inflation cools but core month-over-month numbers stay stubbornly firm, I won’t just seize the headline figure and call it good news. And if the overall and core trends don’t line up, I’ll look at the components first—I won’t assume BTC must fall just because one hot number appears.
After the data is released, I first watch the initial volatility, then see whether the price can continue moving in that direction. I also watch how the dollar and U.S. Treasury yields are behaving. If the signals from the bond market and the crypto price conflict with each other, or if the data seems bullish but BTC spikes and then reverses, I’ll slow down. Only when PPI and CPI provide similar clues and the market reaction isn’t quickly walked back will I increase my confidence that the trend will continue.
The next FOMC meeting will be held in the U.S. on September 15 to 16. This week’s inflation data will affect how the market thinks about the meeting, but it can’t be used to pre-approve the outcome before the meeting. On Thursday I’ll look at the first wave of information, and on Friday I’ll look to see whether it can be confirmed. I’d rather enter a bit later than treat sudden spikes and drops right after the news breaks as proof that a trend has already been established. DYOR
