"After the recessionary ISM number, risk aversion is the theme and [USD/CAD] is actually higher post release. Stops are in place through 1.0040/50 and these are a likely target in the aftermath of the release. Earlier, Funds had struggled to clearly breach parity, due in part to Cad positive flows on the crosses (Eur and Cad). Some locals are turning more bearish on the Cad's chances after the finance official comments Monday (concerned economy and Cad has been disproportionately affected by global imbalances) and the recent failure to go on and breach the 100-day moving average, which comes in currently at 0.9895/00. Ahead, good accounts such as Canadian importers, US real money funds and hedge funds have been noted buyers. A clear 1.0050 break could open up 1.0100/20, tech contacts say. 14:15 GMT - [DON'T TRUST THE ISM DATA] We think the massive drop in the ISM business activity index today is not a reliable guide to what is going on in the economy. We have complained for the past couple of months that the index was too steady, far steadier than is normal and completely wrong in a period of big changes in the economy. We already thought this index was doing a bad job of reflecting economic activity. The January release makes up for the recent lack of volatility in the index, but if prior readings were misleading, then any comparison between the January data and prior readings must also be misleading. We have been economic pessimists for some time, but we will not be using the ISM non-factory data as evidence to support that view. "

''The [USD/CAD] traded weaker for most part of the session reaching an intraday low of 1.0052 as mkt players kept to the sidelines ahead of the Lunar New Year holidays. However, the release of the IVEY PMI later tonight presents a significant event risk for the pair after last month's disappointing print of 45.9 the first reading under the boom/bust 50 lvl since Dec 2006. That reading saw the pair chalking up huge gains but stop short of the 200D moving avg resis at 1.0376 before retreating back towards the 0.9900 lvl but solid support at 0.9880 prevented further erosion. With mkts pricing in another Fed cut in Mar, a stronger than f/c reading will send the pair tumbling as it may lessen a need for the BOC to cut rates again. However, a weaker reading will see a sharp rally as that will heightened speculation that the BOC may have to be aggressive in cutting rates to stave off an econ slowdown. ''

Now the positive Ivey report is out I would have expected the pair to drop, the CAD to strengthen, but all we got was:


"[USD/CAD] dropped around 35 points in response to the much stronger than expected Canadian IVEY PMI data, which came in at 56.2 vs 45.9 in Dec and against the 47.0 expected reading. The pair had been hovering around 1.0150 pre-release, but the initial reaction to sell may be a short-lived moved as players consider the fact that some correction had been due after last months dire reading. Buying dips ahead of parity should emerge as stocks dip once again into the red as financials head lower. The pair should find technical support at 1.0010. "

The report said: "[CANADA JAN IVEY PMI] rose to 56.2 from 45.9 in Dec. This is well above the consensus forecast of 47.0, but it is not surprising. The index is not seasonally adjusted. It has fallen below 50 in the past 2 Decs and risen to the mid-50s in Jan. This Jan is just a continuation of that pattern and says little about the economy. Employment rose to 52.8 from 48. Inventories increased to 50.7 from 42.9. Deliveries rose to 45.2 from 39, while prices jumped to 67.1 from 60.1."

Wow!!
This artical made me double check my CAD short.
Check out the $Fut (DX).
Thanks,
Joe

I love how the forum is quiet when no one has a clue which way things are going to go.

Yes, it seems like a different environment this month. Last month I did very well scalping profits, but this month I just haven't had much confidence in the direction. I took a small loss of 26 pips on my trades so far this week, which is good considering my positions.

Tonight I placed limit orders to buy if the price drops to 1.0025 and sell if it reaches 1.0125. I will reassess in the morning.

usd/cad pair has made a head shoulders one shoulder stops at 12/14/07 the neck is at 12/28 /07 the head is at 1/22/08 the other shoulder stops today 2/07 08 looks like happy days again at least to 12/28/07 which is right at around 9750. go short side.

Well morning here, my sell order was filled at 1.0124 over night and I bought to close at 1.0098 for 26 pips profit. Now even on the week.

The way things look now, it seems this pair wants to move higher, so I will wait out the day and look for a new entry tonight. I still have a limit order for 1.0025 to buy, should the pair weaken that much, I will buy in.

More news:
"[USD/CAD] has been holding pretty firm throughout the European session and US afternoon trading, with lower stocks and heavy oil prices both working to keep the Loonie under pressure. The key 1.0120 200 dma and 1.0122 20 dma have been taken out as the topside builds momentum, with the bad earnings report from Wal Mart further underpinning the headline. Having broken higher today through some key levels, scope for a 1.0200 test is now more than likely, with the Canadian employment data also being seen as a key event risk tomorrow. "

From where I am in Alberta employment is strong. However out east is weak and the manufacturing sector in Ontario is likly weak, so there is a real risk for more down side to the CND.

Also the USD seems to be strong dispite all the negatives in the US economy. The US negatives seem to be putting more fear into the rest of the world as if the US is doing that bad, then it will be even worse for all the rest of us! At least that is how it seems in my opinion. Thus all world currencies are falling.

USD/CAD drop back down towards parity on this morning's Canadian labor market data. Here is the write up I did post-release that is currently up on DailyFX.com:

The Canadian labor markets bounced back in a big way in January, with the net employment change surging a greater-than-expected 46,400 after tumbling 18,700 in December. Meanwhile, the unemployment rate surprisingly fell to a 33-year low of 5.8 percent.

As we discussed in yesterday’s DailyFX Cross Market Reactions report, the January Ivey PMI reading suggested a solid improvement in these labor market figures. It appears that despite a sharp slowdown in business and trade activity at the end of 2007, conditions improved in early 2008 as domestic demand remains robust. Furthermore, the news indicates that the Canadian economy may be better equipped than previously expected to weather a massive slowdown – or worse, a recession – in the US.

a train is coming and its the usd/cad pair as i said yesterday a head and shoulders has formed and now the usd/cad pair is head down back to nov 07 lows again this is same head and shoulders that formed on back in july and aug and sept same patterns guys go check your charts .

Short yesterday at 1.0120 and will stay with it. Don't believe that going long would be a good choice for me right now. Personally think it will go lower to at least .9700 if not lower.

Gizmo,

Yes, I got stopped out of my long, but made a little on my short I sold short at 1.0124 and took profit at 1.0098, but that was two days ago.
For my long I was expecting a bounce and had a limit order to buy in there, at 1.0024 and last night it wasn't even looking like it would be filled. Yet it was filled and now I have a loss on that one this morning. I sold out at 0.9961to close. Hate that.

Seems the much stronger then expected employment data and a oil bounce has helped the CAD short term. This may be enough to turn the tide completely so that is why I took the loss.

I will wait out the rest of the day to see how this shakes out once things settle down.

Lesson for me was not to have a limit order in ahead of a event risk like that. I suspected the employment data could go either way. And there was good arguments for both bullish and bearish positions.

I normally would not place an order ahead of an event either but I heard more rumors about positve numbers than negative so I figured the CAD would gain. Some of the other indicators showed a possible reversal as well so I took the chance based on how I perceived the outcome would go. Could have gone the other way though so maybe a bit of luck too.

Possible, I suppose, but the fundamentals don't support that.