Article points out why the Canadian dollar will rebound. This will be the same reason that gold rebounds. Why FB has been saying there will be a sharp reversal on the USD. Why soon things will return to normal with the USD dropping like a rock.

It's not a flight to quality. Never has been. Give me a break. If it was a flight to quality do you really think anyone would choose the greenback. When was the last time anything American was associated with quality!

As soon as the tide turns it's going to be a violent reversal. Gold will be proven to be the real "Quality" and then you'll see true flight.

JOHN PARTRIDGE

Globe and Mail Update

October 24, 2008 at 2:06 PM EDT

The Canadian dollar could quickly recover more than half the massive losses it has sustained this month once banks, hedge funds and other big investors no longer have to buy vast quantities of greenbacks and yen to cover short positions in those currencies, CIBC World Markets said Friday.

“It's not interest differentials that are driving the foreign exchange move,” CIBC senior economist Avery Shenfeld said in a note to clients, as the loonie was hovering at between about 78.50 cents (U.S.) and 78.70 cents in midday trading, down more than 15 cents from the beginning of October. “Instead, it's a wave of ‘forced' U.S. dollar and yen buying to cover short positions created by other asset price developments.”

But this wrenching process could be over “quite soon” and bring a “significant snap-back” for some of the many currencies that have plunged against their U.S. and Japanese counterparts.

“For the C$, the last five or ten cents of decline might be reversed as fast as they came, with further gains in the latter half of next year as the global economy and commodities rebound,” Mr. Shenfeld said.