The Week Ahead: Fed Rate Cut and Mag 7 Earnings Could Boost Crypto Market

TLDR

• Microsoft reports Q1 FY2026 earnings Wednesday with analysts expecting 11% earnings growth and 38% Azure cloud revenue increase to $23 billion
• Federal Reserve widely expected to cut rates by 25 basis points to 4% on Wednesday, marking 150 basis points of total easing since September 2024
• Bitcoin rose 1.7% to $113,600 while XRP, ether, and solana gained 3% over 24 hours ahead of key economic events
• Fed Chair Powell’s comments on ending quantitative tightening program could boost crypto markets as banking reserves fall below $3 trillion
• Bank of Japan expected to hold rates steady Thursday while Mag 7 tech earnings and Trump-Xi summit add to market volatility factors

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Microsoft prepares to release its first quarter fiscal 2026 earnings on Wednesday after market close. Wall Street analysts forecast adjusted earnings of $3.68 per share, representing 11% growth.

Revenue projections point to strong performance across Microsoft’s cloud business. Azure cloud platform revenue is expected to reach $23 billion, a 38% increase from the prior year period. Total company revenue is forecast at $75.5 billion, up 15% year over year.

Analyst feedback suggests results could exceed expectations. Deutsche Bank reported overwhelmingly positive responses from Microsoft customers regarding the company’s competitive position. Citi analysts noted strong demand for Azure from corporate and public sector clients.

Infrastructure spending remains a key focus for investors. Microsoft indicated it would spend $30 billion on data centers and cloud infrastructure in the most recent quarter. Bank of America analysts project full-year capital expenditures of $125 billion, exceeding Wall Street consensus by $10 billion.

The spending figures have direct implications for AI infrastructure suppliers like Nvidia. Earnings reports from Microsoft, Alphabet, Amazon, and Meta this week will provide insight into demand for AI chips and data center equipment.

Fed Rate Decision Takes Center Stage

The Federal Reserve meets Wednesday with markets pricing in near certainty of a 25 basis point rate cut to 4%. CME Fed funds futures indicate another cut likely in December. This would bring total easing to 150 basis points since September 2024.

Source: Forex Factory

Fed Chair Jerome Powell’s press conference will lack economic forecasts or rate projections. Market participants will focus on his comments about labor market conditions and inflation expectations. Powell is expected to reiterate concerns about employment risks while characterizing tariff-related inflation as temporary.

The Fed’s quantitative tightening program could face changes soon. Powell recently suggested conditions are approaching the point to end balance sheet runoff. Banking system reserves fell below $3 trillion, a level considered ample for liquidity.

Crypto Markets Show Strength

Bitcoin climbed 1.7% to $113,600 over 24 hours, extending a three-day winning streak. The price action follows seller exhaustion near the 200-day simple moving average at $108,800. The 50-day moving average at $114,250 represents the next resistance level.

Bitcoin USD Price (BTC-USD)

XRP gained 3% and moved above its 200-day moving average at $2.60. Ether and solana also posted 3% gains over the same period. The moves came as traders positioned ahead of Fed and Bank of Japan decisions.

The Bank of Japan meets Thursday with expectations for unchanged rates. Markets price in a quarter-point cut by early 2026. Fresh economic forecasts from the central bank could create volatility.

President Trump and Chinese President Xi Jinping meet Thursday in South Korea during the APEC Summit. Both sides issued statements suggesting progress toward a trade agreement. The meeting could influence risk asset sentiment depending on outcomes.

Apple, Meta Platforms, Alphabet, and Microsoft report earnings this week. Investors will examine AI spending trends that have supported market gains since 2023.

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