USD/CAD to Eye Fresh Mar Lows on Upbeat Canada Employment Report

Canada Employment to Increase for First Time in 2016.

Unemployment to Hold Steady during 7.2%, Participation Rate to Narrow to 65.8.

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Trading a News: Canada Net-Change in Employment

The near-term miscarry in USD/CAD might mostly uncover over a subsequent 24-hours of trade should Canada’s Employment news prominence an softened opinion for a segment and inspire a Bank of Canada (BoC) to pierce divided from a easing cycle.

What’s Expected:

USD/CAD Canada Employment

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Why Is This Event Important:

A 10.0K miscarry in Canada Employment might heighten a seductiveness of a loonie as BoC Governor Stephen Poloz adopts a some-more confident opinion for a genuine economy, and a executive bank might validate a wait-and-see proceed via 2016 as a risks surrounding a segment are ‘roughly balanced.’

Expectations: Bullish Argument/Scenario

The ongoing enlargement in a housing marketplace interconnected with signs of a stronger liberation might inspire Canadian firms to boost their labor force, and a noted miscarry in pursuit enlargement might pull USD/CAD behind towards a monthly low (1.3227) as it rises interest-rate expectations.

Risk: Bearish Argument/Scenario

However, aloft factory-gate prices accompanied by a slack in private-sector expenditure might drag on a labor market, and a gloomy practice news might furnish near-term headwinds for a Canadian dollar as it fuels conjecture for a BoC rate-cut in 2016.

How To Trade This Event Risk(Video)

Bullish CAD Trade: Canadian Employment Rebounds 10.0K or Greater

  • Need red, five-minute candle following a news to cruise a brief trade on USD/CAD.
  • If marketplace greeting favors a bullish loonie trade, sell USD/CAD with dual apart position.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to entrance on remaining position once initial aim is hit; set reasonable limit.

Bearish CAD Trade: Labor Report Fails to Meet Market Expectations

  • Need green, five-minute candle to preference a prolonged USD/CAD trade.
  • Implement same setup as a bullish Canadian dollar trade, only in reverse.

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Potential Price Targets For The Release

USD/CAD Daily

USD/CAD Daily Chart

Chart – Created Using FXCM Marketscope 2.0

  • Long-term opinion for USD/CAD stays slanted to a upside as a span preserves a descending channel arrangement from behind in 2014, though span stands during risk of retracing a miscarry from a Oct low (1.2831) as prolonged as a Relative Strength Index (RSI) retains a bearish arrangement carried over from a before month.
  • Interim Resistance: 1.4660 (78.6% retracement) to 1.4730 (78.6% expansion)
  • Interim Support: 1.2860 (78.6% retracement) to 1.2930 (61.8% expansion)

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USD/CAD SSI

  • The DailyFX Speculative Sentiment Index (SSI) shows a sell throng stays net-long USD/CAD given Feb 25, with a ratio attack a near-term impassioned in Mar as it climbed to +1.50.
  • The ratio stays off of new extremes as it narrows to +1.21 forward of Canada’s Employment report, with 55% of traders now long, while open seductiveness stands 3.7% next a monthly average.

Why and how do we use a SSI in trading? View a video and download a giveaway indicator here

Impact that Canada Net Change in Employment has had on USD/CAD during a before month

January 2016 Canada Net Change in Employment

USD/CAD Chart

Canada suddenly strew 5.7K jobs in Jan after adding a revised 24.1K positions a month prior. Moreover, a stagnation rate rose to 7.2% to symbol a top given recordkeeping began in 1996 even as a lkabor force appearance rate hold solid during 65.9% during a same period. The slack in pursuit enlargement might prompt a Bank of Canada (BoC) to keep a discreet opinion for a region, though Governor Stephen Poloz might mostly validate a wait-and-see proceed in 2016 after implementing a ‘insurance’ rate-cuts final year. The Canadian dollar mislaid belligerent via a North American trade, with USD/CAD climbing above a 1.3800 hoop to tighten a day during 1.3909.

Read More:

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— Written by David Song, Currency Analyst and Shuyang Ren

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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