As expected the Bank of Canada has increased the key interest rate up 25 basis points to 3.25%. Domestic demand remains firm says the Bank, and it expects the Canadian and American economies to ramp up in the second quarter.

The Canadian dollar fell 0.1¢, at US68.69 cents in early action, despite predictions that a Liberal win in Quebec would boost the loonie. It may climb back up based on the Bank of Canada’s announcement.

Wall Street futures trading turned south after two economic reports. The New York Empire index of manufacturing showed weak results. And chain store profits made a gain of only 1.3% in March. Most economists are looking forward to post-Iraq economic numbers.

The rest of the world seems to be reacting to the wind-down of hostilities in Iraq. Overnight in Asia, Japan’s Nikkei stock average rose 86.73 points, or 1.12%, to 7,838.83. In Hong Kong, the Hang Seng index rose 98.55 points, or 1.15%, to 8,632.1.

In Europe at midday, London’s FTSE index is up 1.72%. Frankfurt’s DAX has jumped 2.86%. Paris’s CAC 40 has climbed 2.56%.

In business news, Celestica is warning that it won’t do well in the second quarter and may lose as much as 10¢ a share. The stock is likely to take a battering today.