The winner is… Deflation!  Trading theme in place…  RBA cuts rates 75 BPS!  Manufacturing collapses! And Now… Today’s Pfennig!

Profit taking was the name of the game during Tuesday trading on the Canadian markets as investors position themselves ahead of the third quarter earnings season. For the tale of the tape, the TSX Exchange gave back 4.44%, while the TSX Gold Index fell 9% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, lost 1.58%, with the declining issuers out pacing the advancers by a 471 to 351 margin on volume of 142 million shares traded.

The Daily Reckoning’s currency expert Chuck Butler says the dollar is being taken to the woodshed. The greenback is losing ground against all major currencies as the credit crisis continues to wreak havoc in the U.S economy. Chuck says disappointing inflation or retail sales data this week will send the dollar to new depths…

Aussie dollar heading to parity… Swedish krona/Norwegian krone poised for rate hikes… Canadian loonie bounces as commodities soften… British pound turns to the dark side…

As I said last Thursday, the majority of foreign central banks continue to hike lending rates this year amid surging inflation.

The gold bugs must be scratching their heads. After all, it’s just not supposed to work this way.

The Australian dollar is as strong as it’s been since the beginning of the commodities boom. It takes just one dollar and five Australian cents to buy the greenback.

Q: Even if the U.S. should go into an extended recession and dampen the global markets as well, won’t the emerging markets’ need for oil and other material commodities continue to boost demand and prices? – L.H.