You can also read this news on BH NEWS: PMI Data Sparks Cryptocurrency Turbulence
The recent release of Purchasing Managers’ Index (PMI) data, a crucial U.S. economic indicator, has triggered notable fluctuations in the cryptocurrency market. The tight interplay between the U.S. economy and digital currencies has been spotlighted by distressing employment figures and rising producer inflation caused by tariffs. To comprehend these dynamics, it is vital to parse the insights offered by the PMI.
The PMI serves as a comprehensive measure of economic health, assessing current activity levels and demand within various sectors. Notably, a PMI figure below 50 signals a downturn or potential recession in the scrutinized sector. The latest preliminary data reveal positive trends: the U.S. S&P Services PMI registered at 55.4, surpassing forecasts of 54.2, while the Manufacturing PMI hit 53.3, well above the predicted 49.7.
Such data release saw the U.S. Dollar Index climbing beyond 98.5, closing in on its all-time high, while Bitcoin experienced a rise reaching $113,500. Although a recession scenario is less desirable for cryptocurrencies, the metrics imply that interest rates might stay elevated, impacting the crypto market dynamics. Business activities in the U.S. surged at an unprecedented rate in August, pointing to a robust third-quarter performance.
Escalating tariffs are a significant concern, driving an increase in average sales prices — the sharpest in three years. The PMI report highlights this as a key factor.
Chris Williamson, Chief Economist at S&P Global Market Intelligence, highlighted, “The august PMI readings reinforce the notion of a solid showing by U.S. businesses in the third quarter, with a 2.5% annual economic growth rate, outpacing the previous quarter’s 1.3% average pace.”
Both manufacturing and service domains are reporting heightened demand, causing a backlog and pushing inventories to unprecedented levels — a phenomenon linked to apprehensions about future supply conditions. This demand growth propels employment upwards but also fuels pricing power, with increased tariffs being transferred onto consumers.
In light of these factors, several key conclusions can be drawn:
Despite the positive avoidance of recession risks, the bolstering of employment and wages diminishes prospects for rate reductions. This scenario is unfavorable for cryptocurrencies, potentially reversing recent market gains and paving the path for a decline, as interest cut expectations dwindle this year.
By BH NEWS
about 4 hours ago
