For my friend, who asked a great question about why the Canadian dollar has fallen back off the Scarborough Bluffs into Lake Ontario - here's some insight from commenters at the Globe and Mail. They make as little or much sense as anyone else who's taking stabs at an explanation.
"Given our productivity, other than selling our resources, we have little to offer. Thus, our dollar is falling to where it should. Even our vaunted surplus is disappearing faster than we can blink as the drop in commodity price hits all aspects of government revenue (consumption taxes, corporate taxes, royalties, etc.), and has negative spin off effects into the general community which will only further drop government revenue. Lastly, our exports will fall and, since we produce nothing ourselves, imports will fall slower." b W from Canada
"I like the widespread denial in Canada and the Pavlovian response on blaming US. Housing bubble in Canada is as bad as in US, just read the other day that prices in New Foundland appreciated 30% in the last year, leave alone SK...Banks are not in better shapes, some of them CIBC and TD made their bets in US, too. Wait until, house prices drop significantly in Canada and all those mortagages become sour. The really abberation was having the CAD$ appreciating from 0.63 to 1.10 from 2002 to 2007. The CAD$ is reverting back to the mean, sometimes overshoots on its way down or up." FLORIN ARSENE
"Currency may regain its vitality quickly after funds stop buying U.S. dollars, yen to cover short positions, CIBC's Shenfeld says"
So, the reason why the US dollar is going is because of demand.
Not exactly reassuring, seeing as it implies a lot of trader are getting caught short (HA!) out there, but at least it's an explanation.
ie: not capital flight to security, but capital repatriation to cover the bills. Tiu Leek from Here