The loonie is currency trading speak for the Canadian dollar. The reason behind this pseudonym lies in the fact that the Canadian dollar is graced with a picture of a loon--thus the loonie was born!
The term loonie differentiates the Canadian dollar from the US dollar, and well it should since these currencies are continually influencing one another, and, like Canada and the US are geographically, constantly side by side. Canada's outstanding rank in currency trading relies largely on the trade relationship Canada has with the United States. This relationship is, in fact, the world's most dominant mutual trade between any two countries.Canada's exports play a big role in this two-sided currency relationship. Because of the fact that 80% of Canada's sales abroad are to the United States, the loonie and its rate is largely influenced by Canada's export business. Because the US is the world's largest economy, the Canadian dollar's value is contingent on the strength of the United States.The loonie is referred to as a "commodity currency" due to the fact that commodities represent roughly half of the sum total of Canada's exports. Since these items are largely non-energy wares, the loonie is affected by the rise and fall in the price of non-energy merchandise. If the goods are valued at more, the loonie benefits. If the price of these products declines, then the loonie suffers.
