Yet the Canadian Dollar is down 60 basis points this morning versus the USD. Huh? It should be soaring on this news, considering most economists agree this phenomenal news sets a very bullish tone for the Looney going forward. The Canadian economy remains resilient as hell, backed by the unrelenting commodity boom and despite our neighbor having caught a nasty cold. So what's up Mr Carney? (you been a bad boy selling out the Looney and buying up more of those precious US Treasurys again?)

At any rate when you pause to think about it, it's pretty obvious there's a reasonable spin - er I mean explanation - for what's going on here. You see what's driving the USD today originates from legitimate and substantial demand for the Greenback. Really. The Dollar has entered a new bull market from a source no economist could predict even a few short months ago. Let me explain.

New demand for the Greenback has flourished to satisfy the growing need for cash to fund the increasing number of garage sales held by financially challenged Americans who are selling their prized possessions for pennies on the dollar, to keep the gas tank and grocery cart topped up. Talk about true Patriots! Here's a snapshot from one of these new economic engines that are popping up across the nation. Uncle Paulson & brother Bernanke are darned proud of yer unrivalled genius:

This phenomena is pushing US retail sales to new heights, resulting in an unexpected boom to the economy boosting Q1 GDP to a "better than expected" growth rate of 0.9%. Yeah that's the ticket! The economy has finally hit bottom and turned the corner just as the drive-by media predicted. Well done folks!

So I guess that's a wrap for this Precious Metals & Commodities boom so better sell your Gold, sell the Looney and buy the Greenback fast before supply runs out. Canadians are parting with their trash currency in droves and heading south to load up the trunk with those garage sale goodies! Now I see the light and understand with my little peabrain why North America needs to quickly merge economically & currency wise before the Looney plunges back to the depths of a $1.60. No need to consult the voters, just hurry up and get it down with through the normal backroom Security & Prosperity Partnership closed door deals!

Globe & Mail link

Canada's current account soars
HEATHER SCOFFIELD


Thursday, May 29, 2008

OTTAWA — Canada's current account with the rest of the world soared into a big surplus in the first quarter of 2008, rising to $5.6-billion because of higher commodity prices and a lower travel deficit, Statistics Canada said.

The surplus was almost double economists' projections of a $2.9-billion surplus, and is a major rebound after the fourth quarter saw Canada's first current account deficit in eight years.

(Indeed, the small fourth-quarter deficit was revised up on Thursday to a small surplus of $778-million.)

“Canada's current account blew the barn doors off expectations,” said economists at Bank of Nova Scotia.

Much of Canada's current account surplus in the first quarter was because of a surge in the goods surplus, which widened to $13.4-billion on gains in the export of energy products, Statscan said. Prices of crude petroleum and natural gas soared in the first three months of the year, pushing exports of goods up five per cent from the previous quarter – even as exports of automotive products declined.

At the same time, Canada's services deficit narrowed slightly, as more Canadian and American travellers stayed at home.

The current account measures Canada's transactions in goods, services, investment income and current transfers, and the surplus is broad measure of how much the world owes Canada.

It is a key component of the country's balance of international payments. The current account is mirrored by the capital and financial account, which tracks transactions in financial instruments.

In that account, foreign direct investment flows into Canada slowed significantly, Statscan said, since the takeovers that dominated the fourth quarter of 2007 were not longer mounting.

Canadians, however, increased the speed of their direct investment into foreign economies. As a result, net direct investment outflow was $5.1-billion – the first net outflow since the spring of 2006, Statscan said.

“Foreign direct investment slowed rather dramatically as would be expected given prevailing market dislocation and reduced (near non existent) appetite for leveraged buy-outs,” commented Stewart Hall, market strategist at HSBC Canada. “Yet corporate Canada remained active, taking advantage of a still strong loonie with Canadian direct investment remaining strong.”

The large current account surplus is a positive for the Canadian dollar, he added.

The surplus probably amounts to about one per cent of Canada's gross domestic product, which is small compared to the surpluses seen in 2004, but “impressive” given the slowdown in the United States and pressure on Canadian exports, said Jacqui Douglas, economics strategist at TD Securities.

“Although the substantial appreciation of the Canadian dollar over the last couple of years raised fears that Canada could slip back into a situation of current account deficits ... higher commodity prices are keeping the current account above water, and well out of the red,” she said in a note to clients.

© The Globe and Mail