Financial Update For Dec. 8, 2009

• TSX -21.17 as weighty energy shares fell alongside weaker oil prices
• DOW -1.21 a choppy session impacted by a strong dollar, falling oil and gold prices and comments from Fed Chairman Ben Bernanke that cooled higher interest rate worries.
• Dollar +.45c to 94.98cUS
• Oil -$1.54c to $73.93US per barrel.
• Gold -$5.50 to $1,164.00USD per ounce


"The economic assessment is likely to continue referencing improving conditions and expectations for more," said Eric Lascelles, chief economics and rates strategist with TD Securities. "While it is most likely that the Bank of Canada will reiterate its view that the risks to the inflation outlook are roughly balanced, we highlight the possibility that the risks themselves could be discussed more explicitly with reference both to the Canadian dollar's drag and the possibility of additional strength from domestic demand and housing."
Since the last rate announcement, the dollar has traded below the US96¢ level – or the value the central bank assumed the dollar would be trading at in its most recent Monetary Policy Report.
The jobs data certainly kicked off a fresh round of interest rate speculation, with more bullish analysts believing the Bank of Canada will move before its June 2010 deadline – a conditional date it set based on inflation meeting expectations. The central bank sets its key rate in the hope of generating inflation of 2%.
In its outlook released last week, the C.D. Howe Institute's monetary policy council suggested the central bank needed to emphasize its rate commitment is not set in stone.
"While some members thought the Bank of Canada should follow that course even at the cost of a larger-than-otherwise increase in the overnight rate after June, others thought that the bank needed to re-emphasize the conditional nature of the commitment, and the possibility that changed circumstances would warrant an earlier rise," said the council, made up of private-sector economists and academics.