The breakdown trade, where investors move money out of fiat currencies like the dollar and into limited-supply “hard assets” like bitcoin and gold, could be back in vogue if Thursday’s US non-farm payrolls data backs up Fed Chairman Kevin Warsh’s latest take on inflation.
On Wednesday, Warsh said inflation risks have receded. That comment triggered a quick reassessment of the Fed’s rate hike outlook and sparked a rally in both the largest cryptocurrency and the precious metal. Bitcoin has already pushed above $61,000, while gold has stabilized above $4,050 after falling to $3,942 earlier this week.
These nascent recovery rallies could really accelerate if the jobs data due at 8:30 a.m. ET, shows clear weakness in the labor market. Economists expect an increase of 110,000 jobs in June, down from 172,000 in May, when the unemployment rate held steady at 4.3%. The average hourly wage is expected to increase to 3.5% from 3.4%.
