Too many people know about August seasonal weakness
If the non-farm payrolls 'consensus estimate' is 180K but everyone is expecting a downside surprise, is that really the consensus?
I wrote yesterday about how the jobs report has come in below estimate in 16 of the past 20 Augusts. In the past six years, the average miss has been nearly 50K.
There has been abundant talk about that seasonal problem. There's no doubt the Fed knows about it and will disregard a weak number.
The Fed is usually the last to know so you have to assume every decent trading desk in the world knows about it. Then you have to start wondering if the dollar selling yesterday and today ahead of the jobs report was a sign that specs are already piled into USD shorts. If that's the case, they will all be covering on the headlines, whether they're weak or strong so the only real path for USD is higher. In addition, the headlines will be a confused jumble because the Bureau of Labor Statistics is having technical problems with the lockup.
The way I see it, the numbers will probably be weak but the trade will be to buy any US dollar dip unless average hourly earnings are flat or lower compared to the +0.2% m/m reading expected.
