Forex Signal (Fri. November 5 2010, 7:00am NY Time EDT) - CA 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) CA Employment Change Forecast 15K Previous -6.6K
Unemployment Rate 8.0%

The Trade Plan

Canadian Employment Change report will be release at 7:00am sharp today, and it's the first of two high impact tradable news releases today. What I am looking for is a minimum deviation of around 25K, or the difference between the Forecast number (15K) versus the actual release number; if we get a positive 40K 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 -10K 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 8.0%, from 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
USDCAD has been on a downward trend after the Federal Reserve announced its Quantitative Easing plan on Wednesday of this week. As a matter of fact, USD has been the subject of consistent SELL offs during the past 48 hours after the QE2 announcement.

However, if you take a closer look into yesterday's sharp decline in USDCAD and compare to other major currencies, you'd see that CAD has been weakest amongst commodity currencies when trading against USD... I believe support at parity level should hold USDCAD from declining further, provided we don't get a surprising much better than expected release...

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 are no pre-news considerations for this release.

“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


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