Risk Aversion Pushes Loonie Lower

An increase in risk awareness is largely responsible for pushing the Canadian dollar to a two-week low against its US counterpart. With each report of further trouble in Europe, risk aversion becomes a greater concern and this is driving investors to the perceived safety of the US dollar.

“It seems every 10 minutes there’s a headline from an official in Europe, saying something relating to sovereign debt issues, Portugal, Ireland in particular,” Blake Jespersen, director of foreign exchange at Bank of Montreal, said by phone from Toronto. “The market is just not as bullish as it was a few weeks ago. Ongoing problems in Europe are dragging down the commodity currencies and some of the risk-based assets.”

Source: Bloomberg

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