The United States Federal Reserve meets this week to set interest rates, and markets are bracing for the outcome. A 25 basis point cut is widely expected on Wednesday, which would mark the first reduction in 2025. CME futures show a 96.4% probability of a quarter-point cut and a 3.6% chance of a larger half-point move.
The Kobeissi Letter said the Fed will cut rates for the first time since December 2024 and “blame a weak labor market.” Recent data showed a jump in weekly jobless claims, adding to concerns about slowing employment. Officials have indicated that labor market conditions are now weighing more heavily in their decisions than inflation.
Economic Reports This Week
On Tuesday, the August retail sales report is due, providing insight into consumer demand and household spending. Later in the week, Thursday will bring the Philadelphia Fed Manufacturing Index and new jobless claims data. However, traders expect the Fed’s rate announcement to dominate the week’s trading activity.
JPMorgan Global Head of Market Intelligence Andrew Tyler wrote,
“We have concerns that the September 17 Fed meeting, which delivers a 25bp cut, could turn into a ‘Sell the News’ event as investors pull back to consider macro data.”
Market analysts expect volatility around the Fed statement as investors weigh future guidance.
Crypto Market Moves
Digital assets began the week softer after strong gains last week. Total crypto market capitalization briefly pushed past $4 trillion but slipped by 1% on Monday to $4.13 trillion. With the Fed decision already priced in by many traders, momentum slowed as markets waited for clarity.
Bitcoin traded above $116,000 twice in the past 24 hours but faced resistance at that level before easing to $115,000. It later recovered during Asian trading to return to $116,000. Ethereum touched $4,700 before the weekend but was trading at $4,630 at press time, keeping it in a narrow range.
Analyst Views and Outlook
Nick Ruck, director at LVRG Research, said, “Amid US macro uncertainty and gold’s record rally, crypto assets are demonstrating resilience and long-term hedging properties against inflation.” He added that Fed easing could extend the current crypto cycle into 2026.
Other digital assets were mostly lower to start the week. XRP, Solana, Cardano, and Chainlink saw the largest losses among major altcoins. Traders will be watching whether Bitcoin can hold $115,000 and if Ethereum can maintain support levels as the Fed prepares its announcement.
