Bearish USD sentiment at a six year extreme ahead of NFPs - BNPP

Analysts at BNP Paribas expect Friday’s July nonfarm payroll data to show a strong 205k gain in employment and USD would be likely to respond strongly to any upside surprise.

Key Quotes

“Market focus is more likely to be on wages, where our economists expect a subdued 0.2% m/m increase, which would be a year-on-year deceleration to 2.3% – the lowest level since August 2015.” 

“However, the USD would be likely to respond strongly to any upside surprise in the data, given that bearish USD positioning has reached a six-year extreme according to BNP Paribas FX Positioning Analysis. We have added a long USDJPY recommendation, targeting the top of the range at 115.”