Forex Signal (Fri August 6, 2010 7:00am EDT NY Time) CA Employment Change

[Henry Liu]

We’ll be getting the Canadian Employment Change release number tomorrow, here is the forecast:

7:00am (NY TIme) CA Employment Change Forecast 14K Previous 93.2K
(Unemployment Rate 7.9%)
ACTION: BUY -15K SELL 45K USD/CAD

The Trade Plan
Canadian Employment Change report will be release at 7:00am sharp today, and it's the first of two tradable high impact news releases for this Friday. What I am looking for is a minimum deviation of 30K, or the difference between the Forecast number (14K) versus the actual release number; therefore if we get a positive 45K of release, we should see demand for the CAD rise, therefore we should SELL USD/CAD; however, if we get a negative number, such as -15K or worse, we should see some weakness in the CAD, and that will be my cue to BUY USD/CAD pair.

I’ll also pay close attention to the unemployment rate, which stands at 7.9%, same forecast as last month’s release. As long as this number does not conflict with the Employment Changes, we should follow the direction of the news release. If we get a conflict, such as better Employment Changes but higher Unemployment Rate, then we’ll need to look at the context of the market before take the trade.

I'll be looking to trade this release using my after-news Retracement Method, for more information:
Henry's News Trading Method.

The Market
With recent risk appetite sentiment and the rise of demand on commodity currencies, USD has been under pressure while CAD, AUD, and NZD has been benefitting from this sentiment. If we get a strong release, which may contrast the upcoming weak NFP release, CAD could probably pick up momentum and move below the 1.0100 level before the end of trading on Friday…

With parity in sight for the USD/CAD pair, tomorrow's news is particularly important for CAD traders. During the last two weeks we've seen CAD strengthening close to 3% against USD, and this sentiment is likely to remain strong getting into the release.

Additional Thoughts
As stated before, USD/CAD is a slow moving currency pair, it will move on a strong deviation, but retracement is usually non-existent or very small... Therefore, if we get a strong release, especially when it is going with the pre-market trend, a sooner than later entry should add more pips to your account. Expect to see a spike down --> stall ---> another spike down...

One last observation: I believe that medium to long term view on the USD/CAD is up, at least to the 1.0500 area. So ultimately I'd warn to stay too long on a SELL trade. As a matter of fact, I may even be looking to position a BUY trade if we get to or close to parity.

Pre-news Considerations
USD/CAD may be on the way to test parity. Therefore we may see a sentiment on selling USD/CAD before the release. If we see a test around the 1.0200 or above, a quick SELL trade should be justified... However, make sure to close the trade before the release time.

DEFINITION
“Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”

Historical Chart & Data for CA Employment Change

Thanks,

 

[euroforex]

Russian Wheat Crisis and the Loonie

Just to add that today the announcement of Russia needing wheat from Canada and US - a historic demand - this will strengthen the loonie. I'm favoring now a parity move even though USDCAD has hit June 21 and May 13 support with a minor break through before pull back; but my indicators confirm bearish trend continuing to April 21 suppport - .9990. In the short term my Fib retracement as the current price level at 38.2; which has become a major resistance (1.01701 area)held here since midnight 8/5. So there is a preponderance risk ap for the loonie. Greatly appeciate your professional FX reportage and the Mastermind program on trading the news. Missed out on the first registration - will try next time its offered. Till then you've plugged me into a new strategy that I'm working on now; incorporating into my stock trading. Thank you Henry for being so open and honest with integrity. Refreshing. Rich

 

[dkami]

Thanks for sharing how you would trade this release & happy birthday (for the other day)

 

[george soros]

I appreciate this will come as after timing but I've only just looked at this thread and successfully bought the USD/CAD after the announcement.

I think the market was certainly expecting a positive figure of some sort so I think your -15K as your buy signal was a little harsh. The -9K figure that was announced was quite big enough for a buy imo....but as I said this will probably come across as after timing.....