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The US dollar continues to slide to earth while currencies nicknamed for birds are taking flight, says John Authers in his Short View column, beginning with the Canadian dollar - known as the “loonie” because a loon (bird) appears on Canadian $1 coins.

Strong Canadian retail sales data on Tuesday provoked talk that higher rates would be needed in Canada, and helped its currency gain a cent against the US dollar, he notes.

The loonie, buoyed by strong commodity prices, is now below $1.04 to the dollar. It has gained 36 per cent since the US dollar’s decline began in early 2002 and parity seems possible before long, says Authers.

At least the loon can swim and fly, he adds, noting that the kiwi “can do neither”. Nevertheless, the New Zealand dollar, named for the national bird and buoyed, loon-like, by commodity prices and high domestic rates, has more than doubled against the dollar over this decade.

A kiwi was worth less than 40 US cents in 2000; it is now worth 80.9 cents. It has even risen by 6 per cent since the New Zealand’s central bank intervened last month, Authers notes.

Against the trade-weighted index, the US dollar has dropped by a third since 2000. It is now close to 80, half its level of the 1980s. Its decline this decade has come while the US current account has widened - implying more weakness to come, predicts Authers.

Beyond such fundamental worries, however, the key concern is credit, he says. “Evidence that US credit issuance is drying up implies lighter capital flows into the US: bad news for the dollar.”

And yet, the weak dollar could be keeping US equities above water, Authers adds. Joseph Quinlan, of Bank of America, says overseas profits of S&P 500 companies (helped by a weak dollar) grew 16.4 per cent in the first quarter; US earnings rose 2.7 per cent. US equities rely on the weak dollar. Note that the S&P has gained 13 per cent over the last year in sterling terms, compared to 26 per cent in dollar terms.

Signs of light?, asks Authers. Well, at least the dollar has risen this decade against the rupee of Mauritius, the island of the dodo. But even this currency is up 9 per cent against the dollar this year.