Posted: 09 Oct 2009 04:58 AM PDT

Amazing employment figures warmed the hearts of Canadian policymakers and sent USD/CAD tumbling down. Is the Canadian dollar going to be in parity with the US dollar?

Excellent data

We have a second major surprise this week. After the RBA raised the interest rates, Canada’s employment data was much much better than expectations. Economists were predicting a rise of the unemployment rate from 8.7% to 8.8%. The near history showed that they more too pessimistic in previous releases.

But a drop to 8.4% was not expected by anyone. This is a huge improvement in the job market and in the whole economy.

The accompanying figure, the employment change, was also superb: 30,600 jobs were added, more than 6 times the expectations. Looking back at last month’s 27.1K new jobs, this rise isn’t such a big surprise as the whopping unemployment rate.

Gap in the chart and the road ahead

The reaction in the forex market was instant: USD/CAD fell from a range of 1.0520-40 to 1.0480, and created a hole in the chart. USD/CAD continued tumbling down to 1.0423. USD/CAD now trades at 1.0430.

USD/CAD is at its lowest point in over a year. The last time it was at these levels was during the outbreak of the crisis.

Support for USD/CAD can be found at 1.0300, which was the support line just before USD/CAD took a flight upwards, this time last year. 1.03 also served as a resistance line in more than a few occasions during 2008, before the crisis. This critical level is also a round number.

USD/CAD Parity in 2009 is very possible now. On the other side of the border, the American economy is getting better, but is far from seeing new jobs added. Last week’s Non-Farm Payrolls disappointed and fell more than expected. A positive NFP doesn’t seem so close.

In Canada, it’s already a reality. Both employment figures today were very strong. The day is far from over: In both the US and Canada, trade balance figures are due soon. And near the end of the day, Canada releases the BOC Business Outlook Survey, which will give a broad view of the economy. With these employment figures, it’ll probably be more bright.

Further reading – USD/CAD Outlook.

Forex Daily Outlook – October 9th 2009

Posted: 09 Oct 2009 01:26 AM PDT

The US dollar has managed to erase some of it’s losses towards the last day of trading. Today’s highlights are trade balance figures from a few countries. Let’s see what’s up for today:

German Final CPI dropped by 0.4%, withing expectations, signalling no inflationary pressures. The Trade Balance in Germany showed a smaller surplus this time – 10.6 billion. French Industrial Production rose by 1.8%, much better than expected. There’s still one more event in Europe – a speech by Jean-Claude Trichet, president of the ECB.

In Britain, PPI Input is epected to drop by 0.9%, following a nice rise of 2.2% last time. The Trade Balance will be published at the same time, and is expected to remain stable, at a deficit of 6.3 billion.Check out Casey Stubbs’ technical analysis for GBP/USD, where he talks about a double top.

Moving to North America, Canadian employment figures are due today. The Employment Change is expected to be positive once again, showing a growth of 5,000 jobs. The Unemployment Rate in Canada is predicted to edge up from 8.7% to 8.8%. Learning from the past, it could be better here.

Trade Balance in Canada is expected to show another month of deficit, this time of 900 million. At the same time, American Trade Balance is released and is expected to show the same big deficit of 32 billion.

Later in Canada, the BOC Business Outlook Survey is expected to give a broad overview of the Canadian economy. For more on the loonie, read the USD/CAD Outlook.

Apart from Trade Balance, two FOMC members will speak in the US: Dennis Lockhart and Donald Kohn.

That’s it for quite an exciting week in forex trading.

Forex Trading is No Game

Posted: 08 Oct 2009 08:56 AM PDT

There’s lots of money in the forex market and lots of competition between forex brokers. Some of these brokers try to get customers by presenting forex trading as a game. I find this quite problematic.

Barack Obama on one side of the ring. Queen Elizabeth on the other. Just make your bet on the boxing ring / forex market. I picked Obama and he won of course. The ad showed me that the dollar gained against the Pound and that I instantly made $1122 dollars. I just need to fill a small form and the money is mine…..but wait…

This was of course an advertisement to a forex broker. Nobody makes money instantly. After registering, the people that fill the form will need to open an account, deposit money, and usually trade in a specific volume before getting this bonus that was promised in the ad.

In many cases, the trade volume that these traders need to make causes them to burn out their account. The bonus that the ad promised them never reaches their hands. I won’t mention the broker behind this ad, but I’m sure that some of you know what I’m talking about.

Even if this is totally legal, I find these advertising methods quite problematic. Presenting forex trading as a game in which you instantly win money by placing a bet on one side is very problematic.

Lots of traders lose money in forex. Good traders need to educate themselves before making profits from forex. When you deposit a significant amount of your own money into a forex account, this isn’t a game.

Profit Economics

Friday, October 9, 2009

Forex Crunch Loonie at Parity? Getting very close

Forex Crunch Loonie at Parity? Getting very close

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