Citi: trading the US NFP
Citi's economists are forecasting the October NFP to come at 130K (consensus: 121K, September: 148K). Unemployment rate is expected to jump to 7.5% (consensus: 7.3%, September: 7.2%). "A good number is USD positive, but risk negative, as expectations of a December Fed Taper are dragged forward," analysts say.
Citi outlines 5 main scenarios for the today's NFP reading:
1. Below 90K (5% chance). Broad USD weakness as Taper expectations are delayed into 2014. EUR and GBP supported. USD/JPY drops to the 97 mark.
2. 90 - 110K (10% chance). Stocks positive. Buy AUD/USD.
3. 110 - 130K (25% chance). It is the most likely outcome. FX markets continue with the current trends, fading any EUR/USD strength and buying USD/JPY weakness. Immediate impact is limited.
4. 130 - 150K (45% chance). USD buying gains momentum. EUR/USD and GBP/USD weaken initially, but may gain ground later.
5. Above 150K (10% chance). Taper expectations accelerated to December and very USD positive. Negative for the emerging currencies and stocks.