O Canada! Your dollar shines like thee..

Above sung to the Canadian National Anthem. For the first time since the 1970’s the US Dollar and the Canadian dollar have reached parity. That’s right - no hopping north of the border for some cheap smokes and booze! See what happens when the Fed flirts with a total dollar accident with a “market saving” 50 basis point cut to the fed funds rate?

From Market Watch today:

The dollar has fallen significantly against most major currencies since the Fed made a larger-than-expected half-point cut in both its federal funds target as well as the discount rate on Tuesday, in a move aimed at preventing the credit woes from the subprime mortgage meltdown from dragging down the broader economy.

Lower rates erode the returns on dollar-denominated assets, so the Fed’s announcement sent the dollar into a tailspin against every major currency except Japan’s low-yielding yen.

“The U.S. dollar is clearly being sacrificed by the Federal Reserve in a last ditch effort to save the mortgage bankers,” said Ned Schmidt, editor of the Value View Gold Report.

“Foreign investors would be foolish to buy U.S. investments knowing that the value of the dollar will decline,” Schmidt said.

I’d like to reiterate the sentiment of Mr. Schmidt - the dollar is clearly being sacrificed in a foolish and futile attempt to save the mortgage industry; an industry that 1) cannot be saved by such a cut and 2) needed be saved in an attempt to prop up a clearly over-saturated market place.

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