TORONTO — The Canadian dollar closed slightly higher Monday amid hopes that European Union finance ministers would take action soon to deal decisively with government debt crises in some of its member countries. The loonie was up 0.11 of a cent to 97.25 cents US amid stabilizing commodity prices.
The currency lost about five cents last week after expectations of slowing global economic conditions and a worsening European government debt crisis sent traders flocking to the safe haven status of U.S. Treasurys and prices for oil, copper and gold tanked. The loonie advanced amid what “seems to be increasing consensus of what Europe needs — a larger aid package, the recapitalization of the weakest banks and a plan for an orderly Greek default,” observed Scotia Capital chief currency strategist Camilla Sutton.
“Whether European authorities can deliver is a different question, however at least there appears to be some form of consensus on what the solution is.” European officials said over the weekend that Germany and other rich EU countries are pushing for a new strategy to tackle the debt crisis, which is threatening to take down the eurozone’s larger economies. One proposal on the table is to ask banks and other private institutions that hold Greek bonds to take a far bigger loss on those holdings, slashing Athens’ debt.