Following yesterday’s statements by the Federal Reserve, we highlighted the crucial role of employment and inflation reports for cryptocurrencies. Chairman Powell cannot initiate a clear-cut reduction cycle as inflation has not yet reached the target point. Although the risk of inflation increase has declined since April, embarking on a path of reductions is not straightforward. Therefore, a continued weakening in employment is necessary.
U.S. Employment Data
If the weakening in employment persists and inflation remains balanced, a rise in cryptocurrencies is expected with the anticipation of new interest rate cuts. The U.S. employment data is thus very significant, and you will see that every crucial detail regarding this will be shared over the next 40 days for this reason. Today, the U.S. unemployment claims data was released. While the expectation was 240,000, the announced figure of 231,000 was below the previous 263,000 level.
This indicates an early signal of stabilization in the weakening employment. Philadelphia’s recent business report stated the following:
“The employment index mostly remained unchanged and continued to reflect overall employment increases.
Overall, firms continued to report general employment growth this month, with the employment index showing minimal change at 5.6. Approximately 16% of firms reported an increase, while 10% reported a decrease; 74% of firms reported no change in employment levels. The average workweek index rose by 10 points, reaching 14.9.”
Despite being an early signal, the ADP and NFP data endorsing this optimism might cap the rise in cryptocurrency. Today’s data was not in favor of cryptocurrencies.
