Macroeconomic Forces Could Drive Down the Value of the Dollar

As markets await the US nonfarm payrolls report, ING analysts note that the scales are tipped toward a weaker figure, contributing to volatility in financial markets, including cryptocurrencies.

Economists surveyed by the Wall Street Journal expect the workforce to increase by 185,000 this month, up from 206,000 in June, according to data to be shared today. The unemployment rate is expected to remain the same as June (4.1%) and annual hourly wage growth is expected to slow by 3.7%.

If the data comes in weaker than expected, expectations of a Fed rate cut could rise, potentially providing a boost to risk assets including bitcoin. Investors expect the Fed to start cutting interest rates in September and accelerate easing, despite Chairman Jerome Powell’s statement on Wednesday. Macroeconomic forces could push the dollar lower as the ongoing stock market turmoil and the search for safe havens from geopolitical tensions fade, according to ING.

Weakness in the global reserve currency, which has a major impact on financial conditions, often drives demand for risk assets such as cryptocurrencies.

Bitcoin (BTC) has recovered to $64,500 from its Asian trading hours low of $62,200 ahead of the report, according to CoinDesk data. Analysts expect the upcoming Fed rate cut to push the cryptocurrency to new highs above $74,000 in the coming months.