The Euro appreciated against the majority of its counterparts as E.U. leaders agreed on a second bailout for Greece, thereby reducing fears that the debt crisis would worsen. The market remained positive, especially after the European Central Bank announced that it would offer unlimited three-year loans to regional banks. According to bank officials, the injection of cash is aimed at improving liquidity and easing the credit crunch. Furthermore, last week’s economic calendar releases showed that German business confidence rose to a seven-month high.
Meanwhile, positive economic data out of the U.S. which suggested that the economy is recovering, which in turn caused the U.S. Dollar to decline versus high-risk assets. Other reports showed that crude oil reached $109.95 a barrel, the highest rate since May, while currency market volatility declined the most since 2008. These two factors prompted a rise in monetary units linked to commodities.
The Canadian Dollar reached a four-month high against the U.S. currency as risk appetite increased in the market. Last week the Loonie traded within a two-cent range of the U.S. Dollar following reports showing that retail sales declined while U.S. employment improved. The Canadian Dollar slipped against the Euro on the belief that the current bailout would save Greece from defaulting. And it weakened versus the majority of its foreign exchange currency peers as economists worried that the hike in the price of crude oil would dampen American consumption and therefore hurt Canadian exports, as 75% of Canadian oil is exported to the U.S.