The market close on February 6, 2006, showed that the market conditions influencing the Loonie and the $USD are unchanged from our last commentary (Feb 1, 2006)

The Loonie continues to reflect a lack of buying interest, as shown by the price charts. This lack of interest was shown again today by the Loonie’s failure to hold today’s highs. No serious selling has appeared yet, but a lack of new commitments is making the traders nervous.

Continued weakness for the near term is forecast, especially when the Loonie is compared to the $USD.

The $USD again showed it’s muscle, easily closing higher today (Feb 6,2006)

The day traders were caught on the short side, and there is continuing upward pressure on the $USD as new buyers are being attracted by its favorable price action.

The $USD will continue strong until it has absorbed all the new buying.This is setting the trap for the Momentum traders.

The combination of the political shift in Canada, and the new budget philosophy in the USA, have thrown a monkey wrench into the business as usual assumptions.

Smart money will wait to see how these significant changes translate into economic reality.

Another wrinkle is the turbulence in the Middle East. Apparently, Europe and Scandinavia will be getting the brunt of the drama, leaving the US to focus on internal affairs.

Wayne N. Krautkramer onlypill@cox.net

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