Our economists expect a strong 240k gain in today’s payrolls, a reasonably solid 0.2% gain in earnings, and the jobless rate holding steady at last month’s 5.4% cycle low. Numbers in line with this forecast should be consistent with at least some shift forward in Fed rate hike expectations towards the September meeting and help the USD extend gains vs. the JPY and most other currencies. EURUSD price action might be more complicated on a strong release, with the EUR’s recent sensitivity to developments in long-end yields suggesting caution in the immediate aftermath of a strong US report. If, on the other hand, payroll growth were to disappoint, we could see renewed capitulation on long USD positions, particularly vs. higher yielding currencies, as markets continue to lose confidence in the Fed’s capacity to hike rates this year. Heading into the report, we remain long USDNOK via cash and long USDJPY, long USDCHF and short EURUSD via options.