5 min read The U.S. Non-Farm Payroll report will be released today at 12:30 GMT. With no Federal Reserve meeting this month, the NFP report will be pivotal for setting expectations surrounding the outlook for interest rates.
BTC trades 0.8% lower at 64.3k ahead of the data release, trading within a familiar range.
What to expect from the NFP report
Expectations are for 80,000 jobs to have been created in July after slow gains of just 57,000 jobs in June. The unemployment rate is expected to remain unchanged at 4.2%, while average hourly earnings are expected to rise 0.3% month-on-month.
Looking at the lead indicators, the ADP employment report was weaker than expected at 44k versus 65k expected and down from 95k previously. The ISM Services employment component also fell to a four-month low of 47.4, down from 51.2.
However, the ISM Manufacturing employment sub-component rose to 52.8, up from 49.7, while initial jobless claims fell to 187k, the lowest level since 1969, down from 220k previously.
The data suggests that the non-farm payroll report could come in modestly weaker than expected.
The report will be closely watched as it could determine the next move by the Federal Reserve. The market has recently pared expectations for two rate hikes by December and is currently pricing in a 55% probability that the Fed will hike rates in September.
A weaker-than-expected non-farm payroll report could further reduce those odds, pulling the U.S. dollar and Treasury yields lower. This is typically supportive for risk assets such as Bitcoin and could help the largest cryptocurrency rise above 65,000.
On the other hand, a stronger-than-expected jobs report could see the market lift Federal Reserve rate hike expectations, boosting the U.S. dollar and Treasury yields, which could negatively impact Bitcoin and other risk assets.
Middle East uncertainty continues
The report comes against a backdrop of confusion surrounding U.S.-Iran talks and the potential reopening of the Strait of Hormuz.
Hopes of a deal between Iran and Oman to reopen the Strait of Hormuz had helped pull crude oil prices 10% lower this week. However, oil prices have extended sharp gains today as optimism over the full reopening of the Strait has faded amid reports that Iran may prevent hostile ships from passing through. WTI futures are rising 3%, although they are still set for weekly losses of around 7%.
As a result, the market will be paying close attention not only to the NFP report but also to developments in the Middle East, which could impact the inflation outlook and, therefore, Fed expectations.
A weak NFP report combined with progress towards reopening the Strait of Hormuz to all vessels would likely be the most bullish scenario for Bitcoin. This combination could pull oil prices, Treasury yields and the U.S. dollar lower while further reducing Fed rate hike expectations.
On the other hand, a strong jobs report combined with continued uncertainty surrounding oil supply would be the more bearish scenario. This could keep inflation concerns elevated, support a more hawkish Fed outlook and make a break above 65k more difficult for Bitcoin.
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