It's amazing how much pushback is out there against the concept that the $US is oversold and should appreciate.
It's also amazing how much pushback there is against the concept that the deteriorating US trade deficit would improve, conventional wisdome says it will spiral out of control.
Read 'em and weep. Not only did the trade deficit improve in 2007 over 2006 levels, it improved over 2005. Talk about a turn!
And the Canadian trade surplus continues its downward trend to a 9 year low.. even more interesting is that the surplus with the US shrank and the DEFICIT with the rest of the world, yes you read that right.. DEFICIT with the rest of the world, INCREASED.. how that goes against the conventional wisdom about shipping more commodities overseas).
And it's funny.. the oil sheep bid up oil prices today on the trade numbers on the belief that US economic output won't be as weak as feared so demand for oil won't be as weak as feared. They completely ignore that the consumer, who is the largest user of oil in the US, is pushing back against high prices. They further ignore the implications of an improved trade deficit and the signal it sends for a stronger $US. I wouldn't be surprised when the $US does start to strengthen, oil sheep will turn the argument around and say that should imply higher oil prices to offset potential impact on buyers from Europe and other non $US regions.