USD Playbook Into NFP: Scenarios & Trades – RBS

RBS trading desk economists expect non-farm payroll growth of 220K in August, a result that more-or-less matches the prevailing trend, as the three month moving average of NFP growth currently sits at 235K.

“August non-farm payroll growth has shown a recent history of disappointment relative to the consensus, missing the consensus estimate in 7 of the past 10 years by an average of 48K. That pattern may bias the risks to Friday’s result to the downside,” RBS notes.

“Importantly, our economists see two metrics beyond headline NFP supporting the case for an FOMC hike – the unemployment rate may downtick to 5.2% and a pickup in average hourly earnings growth of 0.3% m/m, with risks to the upside, could push the annual average hourly earnings growth to as high as 2.3% y/y,” RBS argues.

Scenarios and Trades:

Here are some of the scenarios and trades for August NFP as outlines by RBS.

1- 250k to 300k: Long USD/CHF.

2- 200k to 250k (Base-Case): Short EUR/USD.

3- 150k to 200k: Short USD/CAD.

4- 150k or below: Short USD/JPY.


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