Consumer Price Index and Monitoring Unemployment Claims - what it is and its importance for traders, investors, and market watchers
Every week and month, two key macroeconomic indicators are released from the United States, capable of moving financial markets significantly - including cryptocurrencies, stocks, and forex.
1. Consumer Price Index - Consumer Price Index
The consumer price index measures inflation. It tracks how prices for goods and services have changed over the past month.
A rising consumer price index means rising prices - a signal of increasing inflation.
A decrease in the consumer price index or a drop below expectations indicates slowing inflation.
Importance:
Rising inflation may prompt the Federal Reserve (the Fed) to raise interest rates - which typically indicates a decline in risky asset prices such as cryptocurrencies and stocks.
Slowing inflation indicates that the Federal Reserve might pause or lower interest rates - which typically suggests rising asset prices in the markets.
2. Unemployment Claims - Initial Unemployment Claims
This number is released weekly, showing the number of people who have applied for unemployment benefits for the first time.
Rising job claims = slowing labor market
Falling job claims = strong or overheated labor market
Importance:
A strong labor market can sustain inflation (people spend more), increasing the likelihood that the Federal Reserve will maintain high interest rates.
Weak labor market could force the Federal Reserve to cut interest rates to stimulate the economy.
How this affects the markets:
Stock market: does not favor rising interest rates, but prefers stable inflation.
Cryptocurrencies: usually rise with expectations of interest rate cuts (decrease in currency value = increased appetite for risk).
The US dollar: rises with the consumer price index and strong job data, weakens when data disappoints.
Gold and other safe havens: may rise when data is weak and rate cuts seem likely.
On days like this, the market may swing heavily in both directions - so it's best to exercise caution during this period.
High volatility = high risk. Don't be surprised!
Be cautious, manage your trades, and don't chase the noise.
⚠️ Upcoming market changes
📊 Big data = big moves
🧠 Trade smart, not with emotion