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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (10083)	3/27/2002 9:09:35 AM
From: Frank Pembleton	Read Replies (1) \| Respond to of 36161

Good Morning to you too... The news has an "inflation" theme to it this morning - inflation and rising interest rates combined with a shrinking currency and economy? The Canuck buck is also getting killed - along with a lot of other currencies. Regards Frank P. Dollar continues to slide Terry Weber - Tuesday, March 26, 2002 The Canadian dollar — sideswiped by an increasingly nasty trade war over softwood lumber imports to the United States — continued its downward spiral early Tuesday. The loonie — which lost more than a quarter of a cent on Monday — opened at 62.71 cents (U.S.) Tuesday, down 0.39 of a cent. By 2:10 p.m., the dollar was trading at 62.79 cents. "I'm not reading too much into it because moves are amplified due to thin trading conditions," Jane Foley, currency strategist at Barclays Capital, told Reuters. "Canadian economic data have been surprising on the upside. Rate cuts and tax cuts will support economic growth and Canadian fundamentals are supportive of the Canadian dollar." This week's slide comes after a recent period of relative strength for the loonie and was sparked by an announcement Friday by the U.S. Department of Commerce that it would impose 29-per-cent duties on Canadian softwood lumber — marking the latest volley in the decades-old dispute. The U.S. claims Canadian companies are unfairly subsidized, allowing them to dump inexpensive lumber into the U.S. market. Canada denies the allegation and says it will appeal the ruling to the World Trade Organization as well as under the North American free-trade agreement. International Trade Minister Pierre Pettigrew has ruled out retaliation in the dispute, saying Canada would end up suffering more than the United States if the battle escalates. "When you have a $90-billion trade surplus [with the United States], you don't begin to go into boycotts of this or that," he said on Monday. "We can win this very softwood lumber issue on its merit, and that's what we will do." Natural Resources Minister Herb Dhaliwal, however, has said Ottawa should reconsider co-operation with the United States in key areas such as energy in response to the softwood duties. About 13 per cent of Canada's trade with the United States is in forest products. Friday's decision was seen as casting a shadow over the loonie because of the uncertainty it has created. Still, at least some economists warned against overstating the impact of the softwood ruling on the loonie. "A number of commentators — including yours truly — were pinning some of the recent softness in the Canadian dollar on the softwood lumber duties," Doug Porter, an economist at BMO Nesbitt Burns Inc., said in his morning commentary. "While this probably was a factor, and the softwood industry is very important, the point should not be overplayed." Lumber exports to the United States last year, he said, totalled about $10-billion, or about 1 per cent of gross domestic product. "However, net exports of oil and gas totalled almost $40-billion, so a 25 per cent move in energy prices — which is about what we've seen in recent weeks — could alone swing export receipts by $10-billion," he said. © Copyright The Globe and Mail