Over the past two weeks forex traders received a handful of labor reports which have painted a tale of two different stories. All three reports moved their respective currencies, but one thing became obvious: most traders and economists were just wrong about their assessments and hopes. While big moves developed after the release of those employment reports, a bigger picture is unfolding and forex traders should prepare for longer lasting reversals especially if the trend continues.

Today we will take a look at three reports released this month; the US employment report, the Canadian employment report and the Australian employment report. Let’s start with the US and its extremely overvalued currency, the US Dollar. Economists expected an increase of 245,000 jobs in March. The release showed that addition of only 126,000 jobs plus a downward revision of 69,000 jobs to the previous two months. Add them together and you get 57,000 jobs for March. Wait for next month’s revision and the figure is likely to drop even more.

A terrible report, but close to reality. The household survey showed the addition of only 34,000 jobs. Again, expectations called for 245,000 jobs but only 34,000 jobs were added. The US Dollar sold off, but not nearly as much as it should have which means there is a move there waiting to unfold. Fast forward one week and Canada reported its employment report. Economists expected no job gains, the figure was just 0. The actual report showed the addition of 28,700 jobs which, once again, blew right past expectations.

This shows a Canadian labor market performing very well while the US labor market is in a mess. The USDCAD reacted and we saw 500 pips over the past trading days. There are many more to come as the US Dollar, boosted by hope, is extremely overvalued. Fast forward another week as Australia released its labor report this morning. Expectations called for 15,000 jobs to be added in March after February saw additions of 15,600 jobs. Of course economists were wrong once again and the report came in much, much better than expected.

The Australian economy added 37,700 jobs in March, the unemployment rate dropped to 6.1% and on top of that the 15,600 jobs added in February were revised to 42,000. The Australian Dollar surged. Looking at the size of the US economy, which added 34,000 jobs, the size of the Canadian economy, which added 28,700 jobs, and the size of the Australian economy, which added 37,700 jobs, it is clearly visible that the Australian labor market is hot and so is the Canadian one while the US labor market is near collapse.