Canadian Employment ROCKS!!! again....

One of my favourite economic reports to trade, why? because it tends to give good price moves, usually a deviation for +/- 15 is good enough, but even less can work, such as the -8.1 deviation in April. Also with other reports you have y/y, m/m, core, headline, and revisions to prior months all coming out at the same time. This other bits of data can muddle things up. Canadian Employment Change does come out with the Unemployment Rate figure however, but this is just 1 other piece of data, and if the Change figure has a significant deviation the Rate figure will usually be in the same direction (higher unemployment rate is bad, lower Employment Change number is bad as well which would equal a move UP on the USDCAD, GBPCAD, EURCAD, and down on CADJPY).

Last month we did have a higher Unemployment Rate (Bad) and higher Employment Change (Good), the usdcad blipped down for a split second and then reversed above the pre-release price fast. Luckily the deviation on the Change figure, which is the one we get a trade signal from, was not significantly higher above the expected number to trigger a trade. This month was different, everything lined up for us, we had a lower Unemployment number (Good) and a higher Employment Change number (also good). Also this time the Change number was a full +73.2 higher then the 20k expected coming in at +93.2K with Unemployment Rate -0.2 lower at +7.9 below the +8.1 expected...AND did we get a move.

I traded GBPCAD on this and made about 70 pips, but I got out in the 1st minute. Many times with the news you get a huge spike in the 1st minute or 2, then some retracement. Today however there was hardly any, so it was difficult to do a Retracement-type Afterspike trade, which is one of the news trading strategies we use in the chatroom. GBPCAD continued to drift down over the next 2-3 hours like a tire loosing air, you just had to jump-on and ride the momentum.

Apparently this report has totally changed analyst's expectations for the next rate hike from the Bank of Canada, moving the expectation that they will hike sooner.

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GBPUSD short Trade July 8th : Fib - 5pm - 55 ema

Here is today's trade for Thursday July 8th 2010. This happened about 15 minutes after the release of the UK May Industrial Production numbers, which were mixed. m/m was up +0.3% at +0.7% versus 0.4% expected and y/y was down -0.5% at 2.6% versus 3.1% expected. These deviations are not big enough to base a trade on, plus being mixed was not good, there were also some revisions to previous months. A half hour before there were some negative housing figures from the UK June Halifax House Price Index m/m was -0.6 versus +0.2% expected, with previous months also revised lower. The poor Halifax numbers had reinforced a bearish tone on the pound since the 1.5240 spike high 30 minutes before the London market opened, causing a continuation of the downmove from 1.5180 to 1.5150 in the half hour between the Halifax report release and the Industrial Production numbers. The earlier bearish move was too risky to jump into as price was still in the consolidation range set during the asian session in which a very positive Austrialian Employment report had added to risk appetite and bouyed all the pairs versus the US Dollar. So the rally after the Industrial Production Data was a gift, as it came right up to the 5pm NY close price from yesterday's session, came close to the 40SMA (yellow moving average) which I usually use. It did hit the 55 ema however which does work better in some instances. Also the 50% retracement of yesterday's rally was at this level (red horizontal dotted line), the white dotted horizontal line is 161% fib extension of nov 2009 high 1.6875 to dec 2009 low 1.5825. Exit was right before the BOE Rate decision. Entry 1.5185 Exit 1.5125 for +60 pips
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