Downgrade trading, where investors take money out of fiat currencies like the dollar and invest it in “hard assets” with limited supply, like bitcoin. and gold, could be back in fashion if Thursday’s U.S. nonfarm payrolls data supports Federal Reserve Chairman Kevin Warsh’s latest view on inflation.
On Wednesday, Warsh said inflation risks have eased. That comment prompted a rapid reassessment of the Fed’s interest rate hike prospects and sparked a rebound in both the largest cryptocurrency and the precious metal. Bitcoin has already surpassed $61,000, while gold has stabilized above $4,050 after falling to $3,942 earlier this week.
These nascent recovery rebounds could really accelerate if employment data due at 8:30 a.m. ET shows clear labor market weakness. Economists expect an increase of 110,000 jobs by June, up from 172,000 in May, and the unemployment rate will remain stable at 4.3%. Average hourly earnings are forecast to increase from 3.4% to 3.5%.
