TheNews

Trading the News: Canada Net-Change in Employment

Despite forecasts for an uptick in the jobless rate, a 1.8K rebound in Canada Employment may heighten the appeal of the loonie and spur a near-term decline in USD/CAD as the data highlights an improved outlook for growth and inflation.

What’s Expected:

Why Is This Event Important:

Even though the Bank of Canada (BoC) retains a cautious outlook for the real economy, Governor Stephen Poloz and Co. may stick to the sidelines throughout 2016 and show a greater willingness to gradually move away from its easing cycle especially as Prime Minister Justin Trudeau implements fiscal support to encourage a stronger recovery.

How To Trade This Event Risk

Bullish CAD Trade: Job Growth & Unemployment Rate Beat Market Expectations

• Need to see red, five-minute candle following the release to consider a short trade on USD/CAD.
• If market reaction favors a bullish loonie trade, sell USD/CAD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish CAD Trade: Canada Employment Report Disappoints

• Need green, five-minute candle to favor a long USD/CAD trade.
• Implement same setup as the bullish Canadian dollar trade, just in reverse.

Potential Price Targets For The Release
USD/CAD Daily

• USD/CAD may face a near-term recovery as it comes up against channel support, with the Fibonacci overlap around 1.2620 (78.6% retracement) to 1.2650 (50% retracement) offering soft support, but the bearish formation may continue to take shape over the days ahead especially as the Relative Strength Index (RSI) preserves the downward trend carried over from earlier this year.
• Key Resistance: 1.3560 (100% expansion) to 1.3630 (38.2% retracement)
• Key Support: 1.2510 (78.6% retracement) to 1.2520 (38.2% expansion)

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