The Canadian Dollar: Loonie Jumps On Euro Zone Package

The Canadian dollar seems to have gone loonie quite literally on announcement of the Euro zone bailout package. The Loonie climbed 2% on the announcement of the loan package of about 1 trillion US dollars to contain the sovereign debt crisis in Europe. The Euro zone salvage plan has been put together by European Union, European Central Bank and International Monetary Fund.

In reality, the Canadian dollar gained back the ground it had lost with the onset of the Euro zone sovereign debt crisis. The onset of the Euro zone debt crisis had let to investors shedding riskier investments in favor of US dollar based secure investments, which had led the US dollar to move up under the popular phenomenon of risk aversion. The current jump in the Loonie is more of gaining back of the lost ground, with risk aversion taking a back seat. This movement of the Loonie also suggests that investors do not consider it a safe haven currency and the US dollar con! tinues to be the primary risk aversion currency.



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