USD to CAD - 9th April Daily Chart Trading Currency

Yesterday’s candle on the usd to cad daily chart provided little in the way of direction for us as currency traders with the high of the day bouncing off the 9 day moving average and ending marginally below the 14 day moving average which have now crossed providing a bearish signal.  Despite the close being below all three moving averages we are now trading, once again, in a heavy congestion area where we are likely to see a further period of consolidation and sideways movement before any long term trend becomes clear.  As I have said many times before in order for this to be established we will need to see a break below two support areas, firstly that at 1.2145, followed by penetration of the 1.1825 region, and if we achieve the latter then we could see a significant strengthening in the Canadian Dollar.

The fundamental news this morning on the economic calendar for the Canadian Dollar has seen the release of the employment numbers which measures the change in the number of those employed during the previous month.  Whilst these came in worse than expected at -61.3k against a forecast of -50.2k, which on the surface appears bad, it is important to view these numbers as a trend and since the low of February when the number came in at -129k the trend has been one of steady improvement which is why the Canadian Dollar strengthened this morning on the news.  This is an important point to note in that you cannot simply take a number in isolation and view it as good or bad as the market will also consider the overall trend and this is a classic example of a number which superficially appears worse than expected but on a trend basis is actually quite “good news”.  This is often the reason why when the NFP figures are released that initially the market reacts in one way only to reverse very quickly and move in the opposite direction once the data has been absorbed into the bigger picture and ably assisted by the Banks taking out stops.  The unemployment rate came in as expected at 8% a trend which has been steadily increasing since early 2008 from a low of 6.2%.

Later we have the Canadian Trade Balance figures which are forecast to be -1.3bn against a previous of -1bn indicating more goods were imported than exported which is not usually good news for the Loonie.  Released at the same time we have the NHPI data which highlights the change in the price of houses during the previous month.  This is expected to show a fall of -0.5% against a previous of -0.6%.  Simultaneously in the US we have the US Trade Balance, unemployment claims, import prices, and natural gas storage data which I cover in more detail on the euro to dollar site.  All in all a busy day for the usd to cad pair!

My trading suggestion for today is to step aside given the short trading week and thin flows, however if you feel you must trade then look for small short positions by using the 10 to 15 min charts and only trade on shooting stars after a bullish move using tight stops.

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