he value of the Canadian dollar dropped against its southerly rival on Monday as a consequence of ongoing struggles in Greece, one of three euro zone nations awarded international bailout aid, according to published reports.
While the loonie's value was wobbly, the world's reserve currency strengthened as a consequence of rivaling sides' inabilities to advance negotiations regarding the Aegean nation's second bailout, The Canadian Press
reports. Ireland and Portugal also have been awarded international bailout aid in response to suffering from the sovereign debt crisis but the one that Greece is attempting to work out is the nation's second, and some of the funding is destined to be used to make payments from the first bailout.
"The new week is starting with a troubled tone to risk assets, pitted once again on uneven expectations over Greece debt negotiations," head of Canadian FIC Strategy Mark Chandler with at RBC Dominion Securities told The Canadian Press. "Since midday Friday, expectations that a deal for Greece would be completed have been lowered."
As the sides continue to disagree over terms and conditions of the agreement they are negotiating, the likelihood of Greece defaulting on its financial obligations becomes more realistic. Global markets and economies are likely to suffer the consequences of a default.
The crux of the issue is a bond repayment due March 20 to the tune of the equivalent of $19 billion-plus for Greece. But the nation is unlikely to be able to pay that without the release of the equivalent of $170.5 billion-plus in the second tranche of international bailout aid.
Patience for Greece and the debacle in which it finds itself is wearing thin with the European Commission as a spokesman for the body said the deadline by when the Aegean nation was supposed to have completed negotiations for the second tranche of international aid has come and gone. The funding is supposed to be disbursed by the International Monetary Fund and the euro zone.
"It's got the market's full attention at the moment,"
foreign exchange trading director Steve Butler with Scotia Capital
told Reuters. "The longer we wait and the closer we get to the next deadline the more difficult things become."
The value of the Canadian dollar dropped almost one half-cent from its closing value on Friday to the world's reserve currency. Earlier on Friday, the loonie achieved its top value against the U.S. dollar since the final day of October of last year.
Friday's drive of the loonie was propelled by strong economic data released by the U.S. Department of Labor, which stated the unemployment rate of the nation hosting the globe's largest economy fell to 8.3 percent, its lowest since February 2009. The U.S., a top trade and commerce partner to Canada, also created 243,000 jobs during the month of January.
Earlier in the trading session on Monday the loonie was driving higher and thriving on the afterglow of Friday's U.S. Labor Department news. But then the Greek tragedy reared and the loonie endured the damage.
"Everything was looking quite rosy and now it looks like we're on the defensive this morning as we await some sort of resolution," Butler told Reuters, predicting the loonie will continue hovering.
The value of bond prices in Canada for the most part drove higher in value, according to Reuters. Two-year bonds gained two Canadian cents while 10-year bonds gained 22 Canadian cents.
Dow Jones Newswires
reports the world's reserve currency further emerged as a safe-haven as Greece and private creditors could not agree. Discussions conducted over the weekend between Greece's three major political parties regarding austerity measures did not generate results.
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