Key facts
- Former Fed Governor Kevin Warsh suggested inflation risks have diminished.
- Bitcoin has surpassed $61,000, and gold is trading above $4,050.
- U.S. nonfarm payrolls are expected to show a slowdown in job creation for June.
- Average hourly earnings are projected to see a modest increase.
- Weak jobs data could lead to a decline in the U.S. dollar and support bitcoin and gold.
Former Federal Reserve Governor Kevin Warsh's recent assertion that inflation risks have diminished has prompted a reassessment of potential interest rate hikes by the Federal Reserve, leading to a rebound in both bitcoin and gold prices. Bitcoin has already climbed above $61,000, while gold has found support above $4,050 after a recent dip. The upcoming U.S. nonfarm payrolls report for June is anticipated to show a moderation in job growth, with economists forecasting an increase of 110,000 jobs, down from May's 172,000. The unemployment rate is expected to remain steady at 4.3%, and average hourly earnings are projected to rise to 3.5% from 3.4%. A weaker-than-expected jobs report could validate Warsh's view, reduce the likelihood of aggressive Fed rate increases, and put downward pressure on the U.S. dollar, potentially providing a significant tailwind for bitcoin and gold. Conversely, if the jobs data exceeds expectations, particularly concerning wage growth, the current market bounce could quickly stall.