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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (43386)	6/7/2006 4:42:56 AM
From: Johnny Canuck	Respond to of 68226

Loonie falls amid U.S. rate anxiety Jun. 6, 2006. 04:41 PM FROM CANADAN PRESS The Canadian dollar had a volatile session Tuesday amid shaky domestic economic data and an indication that American interest rates may rise farther. Increased speculation that the U.S. Federal Reserve will hike rates by a quarter-point for a 17th consecutive time in two years raised the American currency and helped drive the Canadian dollar down 0.69 of a cent to 89.68 cents (U.S.) after losing as much as 1.05 cents late in the morning. The American rate outlook “is creating uncertainty in the financial markets and that’s a bad thing,” said Andrew Busch, global market strategist Harris/Nesbitt BMO Nesbitt Burns. Markets have been roiled by Fed chief Ben Bernanke’s comment Monday that core inflation, excluding energy and food, is running at an “unwelcome” pace of three per cent or more. Bernanke said the central bank “will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained.” This disappointed traders who had come to think the Fed was ready to pause raising rates amid data indicating a slowdown in the U.S. economy. “We had seen weak consumer confidence numbers and housing data and then we got this weak payrolls number,” said Busch. “And that’s why I think the entire market was going `OK, this should get us back to a coin flip as to whether they’re going to raise rates in June.’” Busch added that negative Canadian data also worked against the loonie. Statistics Canada said Tuesday that construction cooled in April, with the value of building permits down 10.6 per cent from the second-highest level on record in March. “This report is consistent with our view that growth is slowing to a trend pace with the Bank of Canada expected to keep the overnight rate at 4.25 per cent for the balance of the year because of slowing growth and weak core CPI readings,” said a commentary from RBC Financial Group. “Risks are tilted slightly to the downside should more Canadian dollar gains against the U.S. dollar be based on speculation and, therefore, be restrictive for growth.” The Bank of Canada makes its next interest rate announcement on July 11. It last raised rates on May 24 by a quarter-point. There have been indications the central bank was through tightening for the time being, in part because of the run-up in the Canadian dollar, which recently hit a 28-year closing high of almost 91 cents (U.S.).