We’ll be getting the Canadian Employment Change release number tomorrow, and as a fundamental and news trader, here are some of the important factors that I’d be looking for in this release:
7:00am (NY TIme) CA Employment Change Forecast 26K Previous 20.9K (Unemployment Rate 8.1%)
ACTION: BUY -4K SELL 56K USD/CAD
Canadian Employment Change report will be release at 7:00am sharp today, and it is going to be the only high impact news releases for this Friday. What I’ll be looking for is a deviation of 30K, or the difference between the Forecast number (26K) versus the actual release number; therefore if we get a positive 56K of release, we should see demand in the CAD rise, therefore we should SELL USD/CAD; however, if we get a negative number, such as -4K or worse, we should see some weakness in the CAD, and that will be my cue to BUY USD/CAD pair.
I’ll be waiting for the release number, making sure that my deviation is hit, then I’ll wait for the unemployment rate, which is expected to be at 8.1%. If the unemployment rate is as expected or going in the same direction of the release (meaning if I get 8.2% on the Unemployment, I want to see -4K or worse on the Employment, or if I get 8.0%, I’d like to see +56K or better) then I’ll take the trade, if Unemployment conflicts with the Employment Change, then I’ll wait and let the market sort itself out first, at least wait for 10 to 15 minutes before jumping in the market.
Lastly, with USD/CAD trading at parity (1.0000) level, it is important to be careful when SELLING this pair, as we could see a bounce back from this psychological level. Therefore, it’s better wait for a safer entry after the 1.0000 has been taken out.
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.”
Related posts:
- Forex Strategy For Canadian Employment Change 08/05/11
- Trade Plan For Canada Employment Change 06/04/10
- Forex Trade Plan & Video For Canada Employment Change 08/06/10
- Canada Employment Change 02/05/10
- Forex News Trading – CA Employment Change 12/03/10
- Forex News Trading CA Employment Change 05/06/11
- Canada Employment Change Forex Trading Strategy 09/10/10
- Forex Trading Strategy For Canada Employment Change 07/09/10
- Forex News Trading Canada Employment Change 11/05/10
- Forex News Trading Plan For CA Employment Change 10/08/10
{ 6 comments… read them below or add one }
Hi Henry,
Thanks for your insights. I’ve been following your blog only recently and enjoy it due to the fact that I like fundamental analysis.
Henry, could you give your thoughts on the risks and opportunities of spike trading just AFTER the news release? i.e. when a suprise number shows up and you try and fill quickly as possible, with spillage and all. What is your experience with it and do you recommend it? Obviously you can win big with spike trading but you can also be wrong and lose big.
The reason I ask is because yesterday on that Canadian employment number obviously it was a surprise, however it never retraced backwards at all, not to the 30-50% fibonnaci level like you usually draw.
So that means that if you had waited you actually missed out.
My feeling is that on a suprise number it’s relatively low risk to spike trade just after the news since there is support pushing up the USD in this case, on a fundamental basis.
Any thoughts would be great. If you would prefer to send me an email rather than write a long winded response here I would welcome that; ml at mdlcap.com.
Regards,
Matt
Matt:
Thanks for your comments, it’s my rule to reply emails with emails, and comments with comments. As far spike trading, it has its merits when the deviation is huge enough to create a strong surprise in the market. But it all comes down to a few things, knowing the context of the market when you are trading, and know the currency you are working with. If the impact of your news release is strong enough, you could spike trade it and it should eventually work out, but the point of spike trading is trying to catch that spike, if you are unable to catch that spike, due to widened spread or slippage, then why spike trade? It defeats the purpose.
One of the benefits of my Mastermind Mentoring program is that I share my experience. And my experience with USD/CAD is exactly that, very little to no retracements, and that’s how we traded it on Friday, which ended up with about 40 pips of profit, I’ll be posting that video soon.
Henry
Great. Thanks for that.
Looks like I’ll have to join one of your mastermind classes. lol
=)
I’ve subscribed to your newsletter, hopefully it will give me the heads up on the next Mastermind Mentoring program.
cheers.
Thanks for the very clear explanation.
Have a great day!
Gavin
Hi Henry,
Can you explain why USD/CAD rocketed up almost 90 pips a few minutes after the CAD Employment Change news release? The actual number (17.9K V 26K) was only 8.1K worse than forecast, nowhere near our surprise number of 30K. Since Thursdays\’ New York session open, the markets\’ sentiment seemed to be leaning in the direction of risk appetite. Apart from the CAD Unemployment Rate data (8.2% V 8.1%) being .1% worse than expected, I\’m at a loss to see why the market reacted in the way it did.
Looking forward to your words of wisdom.
Gavin
Gavin:
This could get a bit overwhelming but here is the story. There was a rumor yesterday on the Employment Change floating about that it would be a surprise high. Market took that and sold off USD/CAD as soon as it hit 1.0100 back down to parity. Why did market react to this? Because of the U.S. NFP release previous week, which also turned out to be high, and the closeness of both economies must added as confirmation of sorts. So understanding this first, is the key as traders were expecting a better number, instead they got a worse release, or 17.9, missed by -9K, which might not be that bad, but if you add the unemployment rate risen to 8.2%, that added double negative report, which pushed CAD weaker. Of course, when you take a look at the context of the market, you see USD/CAD at parity, that’s your first clue it may bounce back, and then you add the “buy on rumor sell on news” factor, there is only one direction for this trade to go, and that’s up.
Of course I am not saying this AFTER the fact, I made 40+ pips on this trade and I’ll be releasing a video Monday, It shows the value of understanding fundamental analysis.
Henry