Market Comment: February 7

Good morning,

The Australian dollar is trading at a 6-month high after the Royal Bank of Australia unexpectedly decided to maintain interest rates at 4.25%.  Markets had discounted in a 25 basis point rate cut; the surprise move has pushed the AUD nearly one-cent higher against the Loonie.

As the Greek government sits down to re-draft a bailout plan for political leaders to ultimately approve (otherwise face imminent default), over 15,000 workers took to the street in a strike protesting the punishing austerity the country faces.  It is difficult to believe that Greece can eventually grow its way out of a deep recession with one of every two men unemployed, 50% of the population living below the poverty line and 12% of citizens living with zero income.

The Bank of Japan has announced that they will not shy away from intervening in currency markets to put a stop to the Yen’s strength.  The strong Yen, based on increased risk aversion, is severely impacting margins in the export-based economy and threatens to hamper growth.

Canadian building permits for the month of December unexpectedly rose 11.1% vs. the forecast 0.2%, rising at the fastest pace since June ’07.  Commercial buildings in Alberta as well as multi-family dwellings in Ontario led the charge.

North American equity futures are pointing towards a slightly negative open.  Crude Oil has softened, trading 0.65% lower at $96.30 while the Canadian dollar is unchanged against yesterday’s close.  Gold also remains unchanged at $1,725/oz.