From Citi's Andrew Cox:
US payrolls: Weather impact still a USD issue
Citi's economics team is forecasting +250k for Friday's NFP release, well above the median estimate of +190k. The distribution of estimates has a substantial right tail and we expect that many forecasters are erring on the side of caution. Of the 83 forecasters, 72 lie between 150k and 230k, with the other 11 stretching from 235k to 295k.
The problem is that a weak number is a much clearer indication than a strong number. A significant negative surprise is likely to be very USD negative as it can not be explained away by the weather and clearly shows that the recent disappointments were not aberrations.
The impact of a positive surprise (say our economists' 250k forecast) is not clear given that the most commonly cited explanation for the recent string of NFP disappointments was the poor winter weather. A positive surprise may be quickly dismissed as a simple rebound from previous months. That said, if the release is accompanied by significant upward revisions to the previous months, the ambiguity would be removed. In the event of a positive surprise, we think that investors will be quicker to trade USDJPY than EURUSD. USDJPY is sensitive to rate expectations; EURUSD is ambiguous on good news.