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Market Update

The week is starting out with much data to drive us.  Bonds are slightly weaker as the prospects of further cuts from the Fed loom.  Corporate spreads are slightly wider as RBC tapped the market on Friday for an absolutely massive 3 tranche deal.  Adding $3 billion into the Canadian corporate market will have that effect.


CAD$ remains well bid around the par mark.  The strength is amazing, as the "pressure to hit par" has been lifted but the buying continues.  Be careful if you think that par is the end of the road.  Just remember, that even though the CAD$ has been the strongest currency in the world for the past several weeks, our rise is largely due to the plummeting US$.  Should this selling pressure continue, our dollar will be well bid by default.  Other currencies maybe still have some catch up to do, such as the AUS$ and the Stirling.  Both of which are weak against the CAD$ recently, but strong against the greenback.  Exposure to those currencies can be easily bought through government issue bonds or through their respective currencyShares ETF, which trade on New York.


Data will remain light for Canada for the balance of the week, so expect our markets to trade off of the numbers south of the border.  Home data, durables orders and GDP will hit the tape later in the week.


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