Increased macroeconomic pressure has affected the cryptocurrency market in recent times. However, some crypto analysts believe the crypto market could be in for a surge, with the government set to release figures on jobs this weekend.
Good News Is Bad News
The US Department of Labor Statistics is expected to release its jobs report for September 2022 today. This report will reveal details of how many non-farm jobs were added in September, as well as provide an overview of unemployment levels in the country. It is also expected to be the third major economic indicator released in the past few weeks, following the Consumer Price Index (CPI) and Income & Spending Data report.
According to reports, economists surveyed by the Dow Jones expect the report to show an increase in payrolls of about 275,000 in September, a slight drop from the 315,000 jobs added in August. On the other hand, the rate of unemployment is expected to be 3.7%. Experts also believe that average hourly earnings should surge by 0.3% month over month, with a 5.1% surge from the past year.
Ideally, a strong gain in jobs and rising wages would be considered a good thing as they indicate a healthy economy. However, such strong numbers might not be what the government – and the markets – want at this time, with the US facing a rising inflation problem.
The CPI data released weeks ago showed a surge in headline inflation of 0.1% month on month for August. Despite drops in gas prices and a slowing housing market, core inflation also jumped by 0.6% month-over-month and 8.3% year-over-year (YoY). This has led to the Federal Reserve’s decision to increase interest rates by 75 basis points.
If more people get jobs, they earn more and have higher disposable incomes. To combat this, the Federal Reserve could get even more aggressive with its interest rate hikes, a signal that will surely rattle the market and, by extension, the dollar.
The Dollar’s Loss Marks Crypto’s Gain
The expected surge in job numbers has had markets reacting, albeit not necessarily in the way crypto investors would want.
The US Dollar Index (DXY), which measures the greenback’s performance against other major currencies, rose on Thursday, marking its second session of gains. The index has hit a price peg of 112.22. DXY increased by over 1% on Thursday and is up 17% this year. Overseas, markets appear to be rattled as the Euro fell by 0.9% against the dollar at $0.9794.
Regardless, these could be early jitters as the dollar’s rise could soon be halted. A strong jobs report will undoubtedly weigh on the Federal Reserve’s decision on interest rates in November, one which many experts believe could lead to more aggressive hikes.
Charles Evans, the President of the Chicago Federal Reserve, said on Thursday that the Fed’s policy rate is expected to hit between 4.5% and 7.5% by the spring of 2023 as the regulator will be increasing the cost of borrowing to stall inflation.
Whether the dollar doesn’t slump in the short term, its long-term outlooks aren’t necessarily positive either. Since the dollar moves inversely to Bitcoin, a drop in its value would only lead to jumps in overall crypto prices down the line.
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