Canadian Dollar Responds to Employment Numbers.

The NFP report and the Unemployment Rate were the most important events on Friday. Once again, the data was disappointing, with fewer than expected jobs created in January. At the same time, though, the Unemployment Rate dipped again, probably because more people “left the workforce”. Otherwise, the numbers just do not add up. Meanwhile, Canadian employment data was positive. The economy regained 29.4K jobs and the Unemployment Rate fell to 7.0% from 7.2%. Particularly positive was the fact that full time employment increased by 50.5K and the part time jobs declined 21.2k. Clearly, markets saw it as sign of stability, pushing the Canadian Dollar sharply higher, even if the CAD gave back some of these gains before closing.

Early in the week, I discussed a possible long trade in the CAD-JPY. The plan was to buy it at 92.28, targeting 80 pips. It took a long time for the price come to the entry level, as the first move was down, but eventually the order was filled. On Friday, after release of the Canadian employment data, this pair started to move, quickly reaching my objective.

Sadly, not everything worked out as intended. Just in the last post, I covered the CAD-CHF pair, wanting to buy it on a move above 0.82. Following the fundamental event, the price initiated my trade, but quickly reversed. From my experience, immediate reversals are not worth holding on to, so I got out with a loss of 45 pips. That said, I still think there is upside potential here and might re-enter the long when(if) the CAD-CHF makes a new high, above 0.8210. Have a great weekend!

Mike K.