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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: Eva who wrote (80530)	4/12/2007 10:38:21 AM
From: Rocket Red	Read Replies (2) \| Respond to of 312386

Canada Morning: C$ Up, Moving Higher Amid Supportive Backdrop 10:34 EDT Thursday, April 12, 2007 TORONTO (Dow Jones)--The Canadian dollar is stronger and continuing to push on toward new five-month highs early Thursday, building on the momentum inaugurated last week and intensified by Wednesday's break of a key technical resistance level. The U.S. dollar was trading at C$1.1361 at 10:20 a.m. EDT (1420 GMT), from C$ 1.1378 at 8:00 a.m. EDT (1200 GMT), and from C$1.1404 late Wednesday. The Canadian dollar thus far Thursday has moved to its highest intraday levels since late November 2006, with the rally seen as a function of supportive domestic fundamentals, technical factors, and also as a reflection of broad U.S. dollar weakness against major currencies as well. The Canadian currency on Wednesday surmounted stubborn technical resistance around its 200-day moving average near C$1.1445 to intensify its recent momentum, but this likely wouldn't have happened without the support of recent strong economic data. The present rally was ignited one week ago by another strong set of Canadian employment statistics - this time for March - and has also drawn some support this week from encouraging February and March Canadian housing figures, including Thursday's news of an outsize 0.5% monthly, and 10.0% yearly, gain in Canada's new housing price index. Somewhat paradoxically, the Canadian dollar in the view of some has also been bolstered by recent positive U.S. economic news, including late Wednesday's minutes from the Federal Reserve's March policy-setting meeting. The minutes revealed lingering inflation worries among Fed officials, and an overall sense that despite the travails of the U.S. housing sector, the broader economy remains robust and likely in need of higher interest rates at some point in the future. The U.S. economy's ability to resist or limit the effects of a potential economic slowdown is seen as key to the fortunes of Canada's own export-intense economy, so good U.S. news can often play into Canadian dollar strength. "There's a bit of a view that if the U.S. is strong, that's good for Canada," said Don Mikolich, executive director of foreign exchange at CIBC World Markets in Toronto. "That tone seems to be prevailing now, as is talk that's creeping back into the discussion that the Bank of Canada may be on hold at best but may also be hiking instead of cutting interest rates down the road." Others noted that a mild bounce in oil, gold, and other commodity prices so far Thursday is also assisting the Canadian dollar's climb higher. Wednesday's break of the 200-day moving average is widely seen as quite significant and suggestive of further Canadian dollar gains, targetting on a near-term basis the C$1.1350 and C$1.1290 areas. Of potential interest to Canadian dollar players will be a mid-day speech in Montreal later Thursday by Bank of Canada deputy governor Sheryl Kennedy. Kennedy will speak on the topic "Uncertainty and the Conduct of Monetary Policy" beginning at 12:50 p.m. EDT (1650 GMT). Canadian bonds are mostly marginally lower in light trading early Thursday, with the yield on the benchmark Canada 10-year bond at 4.18%, unchanged from late Wednesday's level. These are the exchange rates at 10:20 a.m. EDT (1420 GMT), 8:00 a.m. EDT (1200 GMT), and late Wednesday. USD/CAD 1.1361 1.1378 1.1404 EUR/CAD 1.5326 1.5314 1.5314 CAD/JPY 104.65 104.85 104.70 -By Paul Evans; Dow Jones Newswires; 416-306-2022; paulr.evans@dowjones.com (END) Dow Jones Newswires 04-12-07 1033ET Copyright (c) 2007 Dow Jones & Company, Inc. © Copyright Dow Jones