This brief initial comment from the Legendary Trader Dennis Gartman. For subscription information for the 5 page plus Daily Gartman Letter L.C. contact – Tel: 757 238 9346 Fax: 757 238 9546 or E-mail: firstname.lastname@example.org For a Trial Subscription go to The Gartman Letter)
Canada is “on a roll.” Her banks are amongst the world’s most solvent. Her productivity levels are amongst the world’s highest. Her people’s educations are amongst the world best; her ports are busy; her capital markets growing more and more valid and more and more important with each passing year… and her people own houses at very nearly the same rate as do Americans but without the supposed “benefit” of being able to write off the mortgage interest. Oh, and she’s got “stuff” that the rest of the world needs, including grain, fuel and minerals.
We have long said that it was only a matter of time until the Canadian dollar traded “to and through par,” and we are more convinced of that now than we were previously. The employment data released Friday makes it a certainty that the Bank of Canada shall have to err upon the path of tighter rather than easier monetary policies going forward. Carney & Company have no choice but to tighten… perhaps several times… their policies in the weeks and months ahead, even if this past amazing employment number is revised downward to something a bit less amazing. Can we imagine the o/n base rate in Canada moving 100 bps higher by the year’s end? Easily. Can we imagine it 200 bps higher by the end of ’11? Easily there also. Can we imagine “par” by the end of this year for the C$ vs. the US$… yes, easily again. Indeed, we‘d be quite surprised were it not to trade there.
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