(The survey) was a big surprise this morning, but some of the market is saying that Detroit, because of loss of auto jobs, does not reflect the rest of the nation.
I don't think it is possible for Iran to take money out of both the United States and Europe. There are just not sufficiently deep or liquid markets to place these sums of money.
What we are concerned about is that going forward they may decide to remove petrodollars and redirect them elsewhere. If they do, it is negative for the bond market and ultimately for the U.S. dollar.
The market took this to mean that there is a 100 percent chance that interest rates will be increased at the next meeting and a 75 percent chance at the meeting after that.
The market is happy with the number as it shows strength in Canada's economic growth. Investors are willing to buy the Canadian dollar.
Market players don't want to be caught the wrong way here going into a very heavy data week in the U.S..
This report is nothing short of remarkable. The formula for a strong dollar is strong growth, tight monetary policy and loose fiscal policy. The U.S. happens to have all three. Private investors are comfortable investing in a country like the U.S.
The reason why an inverted yield curve need not foreshadow recession this time is that it is foreign investors and not domestic investors who are increasingly buyers of U.S. bonds.
Given the recent spate of positive January data, CPI and durable goods are unlikely to disappoint. The USD is positioned to make new gains ... as favorable U.S. growth and interest rate differentials weigh on market sentiment.
If the Bank of Canadian continues to hike rates after the Federal Reserve pauses, it will narrow the rate differential between the two. This will make the Canadian dollar more favorable.
