The Canadian dollar hit a three-month low Monday (July 6) after Greeks delivered a no vote to an international bailout plan.
Results from the Sunday referendum, which proposed austerity measures for the financially distraught nation, sent world markets dipping the next morning while benchmark U.S. crude oil prices tumbled 4.3%.
“In standard risk-off fashion, the Canadian dollar is down roughly 0.6% relative to the USD at last Friday's close,” TD economist Andrew Labelle wrote in a note to investors.
By 9 a.m. the loonie had fallen to a three-month low of US$0.7897 in the wake of declining energy prices but market reaction has been “eerily tame,” according to Labelle.
“Part of the tempered reaction is due to the fact that markets are in a wait-and-see mode, pending details on the next step in negotiations. Therefore, trading could remain range-bound until we learn more about European intentions come Tuesday afternoon,” he said.
“Ultimately the ball is in the (European Union’s) court and markets will be hanging on every word that comes out of Tuesday's summit meeting. It is unlikely leaders will accept a proposal that is more lax than the original, as it creates moral hazard on bending to a single country's demands.”
