Forex Signal (Fri June 10 2011, 7:00am NY Time EST) - CAD Employment Change

Henry Liu

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

7:00am (NY Time) CAD Employment Change Forecast 23K Previous 58.3K Unemployment Rate 7.6%

The Trade Plan

The Canadian Employment Change report will be released at 7:00am sharp today. What I am looking for is a minimum deviation of around 30K, or the difference between the Forecast number (23K) versus the actual release number; if we get a positive 55K of release, we should see demand for the CAD rise, therefore we should SELL USD/CAD; however, if we get a negative deviation, such as 23K 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 7.6%. 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 taking the trade.

I’ll be looking to trade this release using my after-news Retracement Method. To find out more about my trading system, read:
Henry Liu's Trading Method

The Market
The overall outlook for the Canadian Job Market is healthy compared to that of the U.S., especially with the recent surprise release of IVEY PMI, which increased speculations that this job report is more likely to surprise to the upside.

Looking at recent GDP and Retail Sales data, which are correlated with the Employment market, we are seeing a slightly softer picture... therefore, we should follow our trade plan strictly in the event that the figure comes out slightly weaker.

Additional Thoughts
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…

Pre-news Considerations
There could be a possibility of a Pre-News sell on USDCAD if the market trades close to the 0.9800 level...

“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 and Data for CAD Employment Change m/m


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