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Bitcoin (BTC) price recovery faces test on non-farm payrolls
The sell-off in Bitcoin prices has halted since the Fed meeting on Wednesday, allowing for a slight price recovery. Further gains will depend, at least in part, on upcoming U.S. nonfarm payrolls data.
The U.S. Department of Labor’s nonfarm payrolls report, due out at 12:30 UTC, is expected to show the world’s largest economy added 243,000 jobs last month after 303,000 new jobs of March. according to Reuters. The unemployment rate is expected to have remained below 4% for the 27th consecutive month, while average hourly wages are forecast to have increased 0.3% month-over-month, in line with March’s gain.
In front of the data, bitcoin (BTC) shows signs of stability, while the dollar index is weaker. Federal funds futures show renewed expectations for an interest rate cut or liquidity easing in November.
According to CoinDesk data, the leading cryptocurrency by market value was trading around $59,000 as of this writing, up more than 4% from Wednesday’s lows near $56,500. The dollar index, which measures the greenback’s exchange rate against major fiat currencies, fell more than 1% to 105.20 after Fed Chair Jerome Powell excluding a rate hike as the next likely move during a press conference following the Federal Open Markets Committee’s decision.
Therefore, according to ING, the upcoming jobs report could represent a crucial event for markets, testing the most optimistic bets on Fed rate cuts.
“Our 210,000 payroll call means we do not expect today’s data to dent the dollar’s downside momentum as markets may fully price in a cut in September and keep short-term USD rates limited,” strategists at ING in a note to clients.
“CFTC data shows net dollar speculative positioning against G10 currencies reported was at 24% of open interest, the highest since June 2019, so room for further long dollar contraction remains substantial if U.S. data will ease in the coming weeks,” the strategists added.
Continued dollar weakness could bode well for risky assets, including bitcoin. The cryptocurrency tends to move more or less in the opposite direction of the greenback, i.e. on its own influences global liquidity conditions.