FXStreet (Barcelona) – FX Strategists at RBS, give the best forex trade setups into possible US nonfarm payrolls outcome scenarios.
Key Quotes
“300k and above – A swift repricing of FOMC tightening expectations would likely put broad upward pressure on the USD. USD/JPY could rise, putting pressure on emerging Asia FX as competitiveness is hit. Long USD/JPY, Long USD/KRW”
“250k to 300k – A solid payroll report that could support the USD. A stronger USD paired with heightened expectations for tighter FOMC policy may put downward pressure on commodity prices. Canada releases its own May payrolls data tomorrow, proving a risk that the CAD moves are exacerbated by its own domestic report. Long USD/CAD”
“200k to 250k – While one could argue that a low 200k print would be a disappointment, we see persistent gains above 200k as sufficient to keep downward pressure on the unemployment rate and satisfies the Fed’s criteria of “continued improvement in the labour market.” (Our economists discuss this point at length in their preview, linked on p 1) This result may be neither strong nor weak enough to alter the current narrative, but a result in this range likely keeps the FOMC on track to hike the policy rate in September. Wage inflation readings may drive the USD. No Trade.”
“150k to 200k – A disappointment, especially when taken in context of other indicators that have shown improvement. Short USD/JPY”
“150k or below – The European reflation narrative has quickly returned to focus amid a single upside surprise in Euro-area core inflation, pressuring the “EUR/USD lower on monetary policy and growth divergence” narrative from the EUR front, even as the US data have looked stronger. Surprisingly weak payrolls could put this theme under even further pressure, and sharp moves in European FI in recent days suggest short EUR positioning remains entrenched. Long EUR/USD”
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