Canadian Dollar Lower as Nation Loses Jobs

Despite a disappointing U.S. jobs report, the USD CAD istrading sharply higher due to an unexpected decline in the Canadian jobsmarket. The news out of Canadareflects its first job losses of the year.

Despite a disappointing U.S. jobs report, the USD CAD istrading sharply higher due to an unexpected decline in the Canadian jobsmarket. The news out of Canadareflects its first job losses of the year.

Today’s Canadian jobs report showed that the economy lost9,300 jobs in July while the unemployment rate unexpectedly rose to 8 percentfrom 7.9 percent. Analysts had predicted an increase of 15,000 jobs after astrong gain of 93,200 in June.

The Canadian Dollar fell on the bad jobs data as tradersspeculated the weakening U.S.economy would have an adverse affect on the Canadian economy going forward.

Based on the drop in yields and the rise in Canadian bondprices, investors are beginning to price in the possibility that the country’srecovery from the recession is starting to cool and could encourage the Bank ofCanada to refrain from additional interest rate hikes over the near-term.

The weak U.S.jobs data has the British Pound in a position to challenge the high for theweek at 1.5967. A move through this level will take out a swing top and a .618retracement level. This move is likely to trigger stops and an acceleration tothe upside.

The Euro has resumed its uptrend with the trade through thelast main top at 1.3262. Upside momentum is building which could drive thismarket to the major .618 retracement level at 1.3510. The main trend willremain higher as long as the main swing bottom at 1.3119 holds as support.

Traders are watching the USD JPY this morning. The weakoutlook for the U.S.economy and the shedding of higher risk assets is putting pressure on theDollar/Yen. This morning this pair tested the November 2009 bottom at 84.83. Abreak through this level is likely to trigger an acceleration to the downside.Traders are approaching this level with caution, however, because of the threatof an intervention by the Japanese government. There may be a technical bouncewhen this level is tested, leading to a possible intraday short-covering rally.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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