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To: ms.smartest.person who wrote (2363)	4/19/2007 3:34:12 PM
From: ms.smartest.person	Read Replies (1) of 3198

World Market Update 19 April 2007 - CUSTOM HOUSE Canadian Dollar Stronger on March CPI Report The Canadian dollar touched a 5-month high this morning after the release of somewhat higher than expected March CPI data. Consumer prices rose 2.3% in March, up from 2.0% in February. Analysts were forecasting a consensus year over year increase of 2.2%. The price index was pushed higher mainly because of sharply higher gasoline prices. The Bank of Canada core CPI figure was also up 2.3% in March, down from 2.4% in February. The data removes some of the uncertainty surrounding the Bank's stance on interest rates. With the Q1 economy looking better than what we saw in Q4, it is becoming less and less likely that the BoC will move to lower interest rates any time soon. This is dollar supportive. In other Canadian economic news this morning, February wholesale sales were reported to have increased by 0.8% vs a drop of 0.7% in January. Analysts were looking for an increase of 0.2%, and the upside surprise is considered supportive of a February GDP growth figure of 0.2% vs 0.1% growth in January. The Canadian dollar has posted gains against the US dollar 8 straight days. Although a retracement can be expected at any time, the economic fundamentals are suggesting there is considerable room for further CAD appreciation. The Canadian dollar is especially strong against the crosses as we see profit taking on GBP, AUD and NZD positions. With these currencies having risen so much over the past few months it is probably time for a period of relative CAD out performance. US dollar Gets a Reprieve on Profit Taking The US dollar is generally higher this morning largely due to profit taking on JPY carry trades involving other high yield currencies particularly the Aussie and Kiwi dollars and the British pound. AUD and NZD are off about half a cent overnight and the pound has given up about a cent. The yen (along with CAD) is the sole gainer on the day as traders close short JPY positions by buying yen and selling the other currencies. So, it is not so much a matter of the US dollar rallying today, rather other currencies are lower because they are being sold against the yen. Equity Markets Lower US equities have opened lower this morning. The Dow is off 63 points and the S&P 500 is down 8 points on nervousness surrounding an overnight report of higher Chinese GDP and possible implications for renewed interest rate instability in China. Canadian equities are also taking it on the chin this morning - the TSX is off 165 points. Gold is retracing some of its recent gains today. The metal is down $6. And, finally, oil has just dipped below $62 on news that an Enbridge pipeline that was closed for repairs last week has been reopened this morning. news.customhouse.com@verizon.net--A-eid--E-%MTUxMDk=%--A-utm_source--E-wmuCaEmail--A-utm_medium--E-PrintVersion

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