Forex Investment and Currency Trading

CAD
The tone in USDCAD shifted over the last two days, and it’s now heading higher. The sharp downturn in equities and end to the brief risk-seeking rally has USDCAD looking upwards again. The stronger than expected Canadian employment number actually sent USDCAD higher, while there was little movement against the crosses. With no further data in Canada today, the focus is going to be on nonfarm payrolls and US equities.
Majors
Markets were fairly quiet overnight, awaiting today’s nonfarm payrolls report. The USD pared some of the gains it made yesterday and European equity markets spent the night in positive territory, though only barely. Oil prices moved back above $62/bbl, after falling just below $60 yesterday, to the lowest level since March 2007. There seems to be a lot of attention on the IMF’s most recent forecasts, released yesterday, where they downgraded global economic growth in 2009 to 2.2% from October’s 3.0% forecast. The IMF expects every G7 country except for Canada to contract next year.

Data

• German industrial production was much weaker than expected, falling by 3.6% M/M in September. Production declined in every single major sector (manufacturing/mining, energy, and construction), corroborating the weakness that we saw in yesterday’s German factory orders data.
• Canadian employment for October was stronger than expected at +10K, but that was due entirely to temporary federal election hiring, since the election took place during the survey week. Aside from public administration, which recorded a 40K gain, the employment picture was fairly weak, with job losses spread across ever single goodsproducing sector, and several services-producing sectors. Once the election effect unwinds next month, it’s likely that we’ll see a string of no growth or small negatives in the Canadian job numbers. The Canadian unemployment rate rose to 6.2% in October, and going to two decimal places, that’s its highest level in almost two years.