Thursday, May 31, 2007

Loonies, Loonies Everywhere!

Making ‘Cents’ of the Headlines: Get Ready for the Loonie to Rocket!

What Happened
Statistics Canada reported the country’s current account surplus grew in the first quarter by C$1.87 billion, to C$6.49 billion.
What Analysts Expected
Canada’s actual current account surplus in the first quarter fell short of analysts’ expectations set at C$7 billion.
How Markets Reacted
The Canadian dollar eventually moved higher on news that considerably more money is flowing into the country than out. Despite the good news, yesterday’s gains were eventually forfeited thanks to a surging U.S. dollar.
What I Say
The U.S. dollar is riding high on the horse lately, but that’s no reason for the Canadian dollar to hang its head. In concurrence with Tuesday’s headlines and fresh off 30-year highs, the loonie is getting even more support.
On Tuesday Canada’s central bank expressed intentions of boosting interest rates in the near-term. And then yesterday, more fuel was added when this current account report showed that foreign countries are importing a sizeable amount of Canada’s goods and services. In order to pay for such assets, these countries are demanding Canadian dollars.
Bottom line: Canada’s economy is in excellent shape -- which bodes well for the country’s currency. There’s no doubt that once the U.S. dollar runs out of pixie dust, the loonie could hit new highs.

{This is something that SOC (Sound Of Cannons) has been bullish on for awhile. Good to see a lot of the online prognosticators following our lead!}

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