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Bitcoin Little Changed on Soft Economic Data Ahead of Fed Meeting
Wednesday morning's ADP jobs and ISM manufacturing reports both came in weaker than expected.
Updated Feb 1, 2023, 5:31 p.m. Published Feb 1, 2023, 3:29 p.m.
Private hiring slowed to its weakest level in two years, according to the ADP National Employment Report, with just 106,000 jobs added in January. In addition, the manufacturing sector continued to contract, with the ISM Manufacturing Survey for January dipping to 47.4.
An index reading above 50 indicates an expansion of the manufacturing segment of the economy compared to the previous month. A reading of 50 means no change. A reading below 50 suggests a contraction.
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Bitcoin barely noticed the news, continuing to trade flat over the last 24 hours at just above $23,000. After a brutal 2022, the crypto has moved higher so far this year, in part as many are expecting a slowdown in the economy and inflation, and perhaps easier monetary policy from the U.S. Federal Reserve.
The ADP report of 106,000 jobs added was a slowdown from an upwardly revised 253,000 in December and well shy of economist forecasts for 180,000. It was the weakest report since a negative print in January 2021. The ADP took note of weather-related disruptions (such as the California rainstorms) during its survey reference week in the middle of the month.
Coming in at 47.4, the ISM survey was down from 48.4 in December and short of expectations for 48.0. It was the weakest level since May 2020. "The U.S. manufacturing sector again contracted, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began," said Timothy Fiore, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. The New Orders subindex – considered a forward-looking indicator – plunged to 42.5 from 45.1 a month earlier.
Later on Wednesday, the results of the Fed's Federal Open Market Committee (FOMC) meeting will be released, with markets expecting the FOMC to hike its benchmark federal funds rate by just 25 basis points to the 4.50%-4.75% range. The market will be focused on the committee's statement to determine whether or not the Fed intends to continue to raise interest rates or whether it is mulling a pause in the tightening cycle at the FOMC's next meeting in March.
Read more: Fed Preview: Powell to Trigger 'Healthy Pullback' in Bitcoin, Experts Say
UPDATE (Feb. 1, 2023 17:30 UTC): Defines what the ISM index readings mean.
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Japan’s Higher Rates Puts Bitcoin in the Crosshairs of a Yen Carry Unwind
A stronger yen typically coincides with de-risking across macro portfolios, and that dynamic could tighten liquidity conditions that recently helped bitcoin rebound from November’s lows.
What to know:
- The Bank of Japan is expected to raise interest rates to 0.75% at its December meeting, the highest since 1995, affecting global markets including cryptocurrencies.
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