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The incompetent hand of the marketplace

10/10/08 | by Adam | Categories: Politics

Link: http://www.cbc.ca/money/story/2008/10/10/loonie.html

Truly I don't understand what drives financial markets and currency fluctuations:

Canada's dollar broke southward through 85 cents US in morning trading, slipping to 84.87 cents, down 2.41 cents from Thursday's close of 87.28.
[...]
Other currencies have been hammered as well as investors buy American dollars despite the weak economic indicators coming out of the United States.

Why would people seek refuge in the US dollar given that it's the US economy causing the financial instability in the first place? Shouldn't they be looking at the Euro instead?

It's not as if the Canadian economy is collapsing: employment is good, the banks are stable, there are no dramatic changes to the business world other than those directly caused by the financial shenannigans in the US in the first place.

 

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