US Core PCE within market expectations in July, Bitcoin price likely to begin recovery

• US Core Personal Consumption Expenditures Price Index rose 0.2% MoM and 4.2% YoY in July.
• The Federal Reserve Chair has hinted at future interest rate hikes in his speech at the Jackson Hole Symposium. 
• Bitcoin price is likely to recover in light of the PCE inflation data.

The Federal Reserve’s preferred measure of inflation, Core PCE, excludes food and energy prices that are influenced by global factors. Core PCE rose  4.2% YoY in July, according to the US Bureau of Economic Analysis report on Thursday. 

The Core PCE reading is within market expectations and below Fed Chair Powell’s preliminary estimate of 4.3% for July.

Also read: Breaking: US Core PCE inflation rises to 4.2% as anticipated

What Core PCE Price Index reading for July means for Bitcoin price

The Core PCE Price Index reading for July was in line with the market expectation, rising 4.2% over the 12 months to July. While this is a slightly stronger pace than the 4.1% increase recorded in June, risk assets like Bitcoin benefit from the possibility that inflation is cooling down in the US.

Fed Chairman Jerome Powell had reiterated in his recent speech at Jackson Hole that officials watch Core PCE more closely, for an outlook on US inflation and offered a preliminary estimate of 4.3% for July’s Core PCE rate. The actual reading came 0.1% below the estimate, in line with the expectations of economists. 

Economists surveyed by FactSet – a research system that provides inputs to Wall Street professionals – had predicted the Core Annual PCE inflation rate to bump up to 4.2%, signaling that inflation is likely cooling down after a year of interest rate hikes.

Moreover, this reduces the likelihood of an interest rate hike in September, easing the selling pressure on risk assets like Bitcoin and altcoins.

Bitcoin is likely to begin its recovery and eye resistance at the $28,000 level, in light of the recent data release. In the event of an interest rate hike in September, BTC’s recovery rally to the August monthly high above the key $30,000 level could be jeopardized. 

BTC/USDT five minute price chart on Binance

Bitcoin price is currently influenced by other factors, like SEC’s appeal against Grayscale’s win in the lawsuit and macroeconomic releases like Nonfarm Payrolls for July. It remains to be seen whether BTC price yields gains for holders or retraces to test support at the $27,000 level.

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