Thursday, the US unemployment claims were higher than expected heaping more pressure on the Green back. At the back of some tight trading where the average daily range averaged 50 pips, the Canadian dollar got some breathing space after a losing streak this week. People claiming benefits rose by 20K. This was 8K more than expected and settling the new figure at 243K. These were some soft news ahead of today’s NFP whose positivity will set the ball rolling for more USD strength-Think FOMC and Yellen next week. The Euro had a reason to rally yesterday after King Mario said that ECB were not in any form of urgency to spur growth and inflation in the face of the already loose monetary policy. This was interpreted to mean bullish Euro by investors and it rallied despite an initial 30-40 dip after the policy statement. On the other side of the border Canadian Foreign minister said that her country will respond appropriately should the House of Representatives pass a border tax adjustment proposal on imports. Canada is their principal trading partner exporting almost 75% of their goods to the US. Many other countries especially those from NAFTA are opposed to the idea insisting that such protectionism will only hurt each other economies and cost jobs which the new administration seeks to create.
To the charts now and I will be looking to trade 30mins before NFP. I will be looking for a good entry position probably at yesterdays low to go long. Prices are still trending lower and haven’t recovered from yesterday’s news. This provides a good opportunity for USD bulls. A break below support trend line in the 30 min chart will mean entry at 1.3480 and a target at 161.8 Fibonacci level at 1.3560 for 80 pip gain. Stop loss will be 30 pips below yesterdays low and since the ADR is low, this stop loss is not too tight. If it goes as expected, ensure you trail your profits with a trailing stop placed 30 pips below the price.
This will be as follows:
Buy Limit: 1.3480
Stop Loss: 1.3450
Take Profit: 1:3 risk reward ratio
Trail your profits at 30 pips below the price.
Have a good trading day and a nice weekend