Craig Alexander Canada Quotations

Given these divergent signals from the Bank of Canada and the Fed, look for the Canadian dollar to strengthen in the near term, trading decisively through 90 U.S. cents.

Speculation has picked up in Western Canada, while housing markets in Central Canada appear to be coming in for a soft landing.

The odds clearly favor the Bank of Canada raising the overnight rate by a quarter point on May 24 to 4.25 percent.

In contrast to Central and Eastern Canada, housing conditions in Western Canada remain very tight and are showing increased signs of speculation. When economic conditions are booming, it can also create the perfect breeding ground for speculative price bubbles to form. That's because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely.

Canada's housing markets remained robust in early 2006, despite slightly higher mortgage rates. However, the dominant theme lurking beneath the national average results is clear signs that speculation has picked up in Western Canada, while housing markets in Central Canada appear to be coming in for a soft-landing.