NEWS TRADING
Thursday April 5, 2012
Thursday April 5, 2012
[8:35am NY Time]
We´ll be getting the Canadian Employment Change release
number tomorrow, here is the forecast:
7:00am (NY Time) CAD Employment Change
Forecast 15K Previous 2.3k
Unemployment Rate 7.6%
ACTION: EURCAD SELL 50K / BUY USDCAD -5K
number tomorrow, here is the forecast:
7:00am (NY Time) CAD Employment Change
Forecast 15K Previous 2.3k
Unemployment Rate 7.6%
ACTION: EURCAD SELL 50K / BUY USDCAD -5K
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
The Trade PlanThe Canadian Employment Change report will
be released at 7:00am sharp 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 EUR/CAD; however, if we get a
negative deviation, 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 is expected remain unchanged 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.
The MarketCAD has been strengthening on the back of recent tension in the Middle East and the fact that USD has retraced its gains on speculations that US QE3 might still be a possibility; of course a positive outcome in the Greek PSI debt exchange deal will promote risk appetite sentiment, which should add demand for commodity currencies such as CAD.
Additional ThoughtsUSDCAD 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…
If the Canadian Employment Change comes at -19.5K or more negative ( -30 trigger), USD/CAD should go up by about 30 pips. If it comes out at +40.5 or higher ( +30 trigger), USD/CAD should go down by about 30 pips.
Based on 24 estimates, median estimate is 10.5K while the average estimate is 13.2K. The highest estimate is 40K (one vote), and then 22K (two votes). The lowest estimate is 5K (four votes), and then 7.6K (one vote). One standard deviation is 7.5K.
Sometimes this report performs really well and sometimes not so well so I decided to use a bit bigger triggers this time. If you want to scalp, perhaps +/- 20 triggers would work but it's a bit risky to trade.
Last month it came out at -2.8 vs +15 expected (-17.8 deviation) but at the same time unemployment dropped by 0.2% (therefore, they conflicted), and we saw a very weird price action. Good thing it didn't hit our trigger because it would be a losing trade.
Two months ago it came out at 2.3K vs 22K but it caused only 20 pip spike.
Three months ago we had small deviation but still nice price action although it was a no trade for us.
Four months ago it came out at -18.6 vs +20 expected (-38.6 deviation) and we saw a good 45 pip spike on USD/CAD.
Five months ago it came out at -54K vs +20K expected (-74 deviation) and we saw almost 70 pip spike on USD/CAD. Amazing spike but also amazing deviation.
Six months ago it came out at 60.9 vs 19.6 expected (+41.3 deviation). It was a really good deviation and also very good price action: about 50 pip spike on USD/CAD.
Seven months ago it came out at -5.5 vs. 23.4 expected (-28.9 deviation) and the price action was not impressive. We can talk about 20 pip spike but the price action was very choppy.
Eight months ago it came out at 28.4 vs 11.3 expected (+17.1 deviation) and not only USD/CAD spiked only by maybe 7 pips, but the price action actually reversed and went the other way. Total crap. This is actually the reason why this report was removed from the schedule for a while.
Nine months ago it came out almost as expected so it was a no trade.
Ten months ago it came out at 58.3 vs. 20 expected, and USD/CAD moved down by a bit over 20 pips and then reversed. Not good.
Eleven months ago it came out at -1.5 vs 28 expected, and we only had 25 pip spike up with immediate retracement.
Keep in mind we will also have the unemployment rate coming out. If they conflict between each other, I would try exit as soon as possible.
Remember that while higher Canadian Employment is good for CAD (selling pressure on USD/CAD), higher unemployment rate is bad for CAD (buying pressure on USD/CAD). Therefore, ideally we would like to see higher employment change and lower unemployment rate, or lower employment change and higher unemployment rate.
Book : How to Make Profits Trading in Commodities: A study of the Commodity Market - W.D.GANN
Book : Currency Trading in the Forex and Futures Market - Carley Garner
I´ll also pay close attention to the unemployment rate, which is expected remain unchanged 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.
The MarketCAD has been strengthening on the back of recent tension in the Middle East and the fact that USD has retraced its gains on speculations that US QE3 might still be a possibility; of course a positive outcome in the Greek PSI debt exchange deal will promote risk appetite sentiment, which should add demand for commodity currencies such as CAD.
Additional ThoughtsUSDCAD 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…
If the Canadian Employment Change comes at -19.5K or more negative ( -30 trigger), USD/CAD should go up by about 30 pips. If it comes out at +40.5 or higher ( +30 trigger), USD/CAD should go down by about 30 pips.
Based on 24 estimates, median estimate is 10.5K while the average estimate is 13.2K. The highest estimate is 40K (one vote), and then 22K (two votes). The lowest estimate is 5K (four votes), and then 7.6K (one vote). One standard deviation is 7.5K.
Sometimes this report performs really well and sometimes not so well so I decided to use a bit bigger triggers this time. If you want to scalp, perhaps +/- 20 triggers would work but it's a bit risky to trade.
Last month it came out at -2.8 vs +15 expected (-17.8 deviation) but at the same time unemployment dropped by 0.2% (therefore, they conflicted), and we saw a very weird price action. Good thing it didn't hit our trigger because it would be a losing trade.
Two months ago it came out at 2.3K vs 22K but it caused only 20 pip spike.
Three months ago we had small deviation but still nice price action although it was a no trade for us.
Four months ago it came out at -18.6 vs +20 expected (-38.6 deviation) and we saw a good 45 pip spike on USD/CAD.
Five months ago it came out at -54K vs +20K expected (-74 deviation) and we saw almost 70 pip spike on USD/CAD. Amazing spike but also amazing deviation.
Six months ago it came out at 60.9 vs 19.6 expected (+41.3 deviation). It was a really good deviation and also very good price action: about 50 pip spike on USD/CAD.
Seven months ago it came out at -5.5 vs. 23.4 expected (-28.9 deviation) and the price action was not impressive. We can talk about 20 pip spike but the price action was very choppy.
Eight months ago it came out at 28.4 vs 11.3 expected (+17.1 deviation) and not only USD/CAD spiked only by maybe 7 pips, but the price action actually reversed and went the other way. Total crap. This is actually the reason why this report was removed from the schedule for a while.
Nine months ago it came out almost as expected so it was a no trade.
Ten months ago it came out at 58.3 vs. 20 expected, and USD/CAD moved down by a bit over 20 pips and then reversed. Not good.
Eleven months ago it came out at -1.5 vs 28 expected, and we only had 25 pip spike up with immediate retracement.
Keep in mind we will also have the unemployment rate coming out. If they conflict between each other, I would try exit as soon as possible.
Remember that while higher Canadian Employment is good for CAD (selling pressure on USD/CAD), higher unemployment rate is bad for CAD (buying pressure on USD/CAD). Therefore, ideally we would like to see higher employment change and lower unemployment rate, or lower employment change and higher unemployment rate.
Book : How to Make Profits Trading in Commodities: A study of the Commodity Market - W.D.GANN
Book : Currency Trading in the Forex and Futures Market - Carley Garner
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