US payrolls fell 23,000 in July with May–June revised down 103,000, pushing unemployment to 4.1% and sending the dollar to a three-month low as odds of a September Fed hike dropped to roughly 30% after a 9-3 July FOMC vote where three officials wanted a hike. Gold rallied 9.3% in a month to about $4,407/oz while Bitcoin was muted, down ~0.8% over the same stretch and trading near $63,572 with $12.6bn in 24h volume (<1% of market cap), indicating thin crypto market reaction to dollar weakness. Markets are now focused on Wednesday’s FOMC minutes and Friday PMI readings, which could reawaken hawkish rate bets and materially affect the dollar, crypto and risk assets.

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In Brief

US payrolls fell 23,000 in July, and the dollar slid to a 3-month low.
Gold gained 9.3% in a month. Bitcoin lost 0.8%.
The Fed's July vote was 9-3, with 3 officials wanting a hike.

The dollar fell to a 3-month low on Monday. Traders have stopped believing the Federal Reserve will raise rates again. Bitcoin (BTC), which normally thrives on a weak dollar, moved 0.7%.

Gold did far better. It has gained 9.3% in a month. Bitcoin has lost 0.8% over the same stretch. The same news reached both assets, and only one traded on it.

Dollar Index (DXY) Performance. Source: TradingView

Why the Dollar Hit a 3-Month Low

The US economy stopped creating jobs in July. Payrolls fell by 23,000, the Bureau of Labor Statistics (BLS) reported.

The revisions hurt more than the headline. May and June were cut by a combined 103,000 jobs. Unemployment now sits at 4.1%.

Shoppers pulled back too. Retail sales dropped 0.6% in July to $763.6 billion, according to the Census Bureau. June had risen 0.2%.

Inflation cooled at the same time. Consumer prices rose 3.4% in the year to July. Core prices, which exclude food and energy, rose 2.5%.

Traders reached the obvious conclusion. Odds of a September hike fell to roughly 30%, down from about 75% in late July. That is the lowest reading since the Fed’s June decision, Brown Brothers Harriman said.

The dollar followed. The Bloomberg Dollar Spot Index fell for a third straight session to its weakest level since May 15.

Two weeks ago, the dollar index near 100 still held firm. That floor is gone.

Gold Caught the Move. Bitcoin Did Not.

A falling dollar usually lifts scarce assets. This time it lifted one of them.

Gold climbed to $4,407 an ounce, while Bitcoin price action tells the opposite story. BTC sits at $63,572, up only 0.7%.

Gold (XAU) and Bitcoin (BTC) Price Performance. Source: BeInCrypto

Trading is also thin. Bitcoin changed hands worth $12.6 billion in 24 hours. That is under 1% of its market value. Last week produced the same split. Gold outpaced Bitcoin sharply after the identical inflation report.

Why Wednesday’s FOMC Minutes Decide the Next Move

Here is what the dollar trade may be missing. The Fed’s July decision was not unanimous.

The vote was 9-3. Three voting members wanted a quarter-point increase, the Fed’s own statement shows. Rates stayed at 3.50% to 3.75%.

The dissenters were Beth Hammack of the Cleveland Fed, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas. All three vote on policy this year.

Minutes from that July 28-29 Federal Open Market Committee (FOMC) meeting arrive on Wednesday. They will reveal how close the call really was.

“We think it will be hard for the market to switch back to a fully hawkish mindset if there are a few sentences in the minutes pointing to a closer call on the unchanged rates decision than most think,” Chris Turner, global head of markets at ING, told Bloomberg.

Global purchasing managers’ index (PMI) surveys follow on Friday. Strong US readings would rebuild the case for the dollar, according to Elias Haddad of Brown Brothers Harriman.

Options desks are already hedging. One-month contracts turned against the dollar for the first time since late February. Longer-dated contracts still favor it.

That gap points to short-term weakness rather than a lasting shift. The Fed does not meet again until September 15-16.

The dollar is trading as though the Fed is finished. Three of its own voting members disagreed three weeks ago. Wednesday’s minutes will show which side read the room correctly.

Read the article at BeInCrypto