Loonie pulls back further as Chinese manufacturing data gives little optimism
TORONTO - The Canadian dollar pulled back further Thursday amid concerns about weakness in China's economy and recent comments from the Bank of Canada.
The dollar closed 0.09 of a cent lower at 90.10 cents US after a decline of nearly a full cent on Wednesday. Earlier in the session, it traded as low as 89.35 cents US, the first time since mid-2009 that the loonie has been below the 90-cent US mark.
Results of HSBC's preliminary survey of Chinese factory purchasing managers in January fell below the level indicating expansion for the first time since July. The report came days after data showed China's economy slowed in the final quarter of 2013.
Investors are concerned it could signal a greater shift in the Chinese economy, which would likely affect exports from Canada.
In commodities, the March crude oil contract on the New York Mercantile Exchange gained 59 cents to settle at US$97.32 a barrel, its highest level this year.
February gold bullion rose $23.70 to US$1,262.30 an ounce.
The Canada's dollar has come under increasing scrutiny since the Bank of Canada's latest reading on the economy on Wednesday.
The central bank said it expects the loonie to remain strong and "continue to pose competitiveness challenges for Canada's non-commodity exports."
It stopped short of calling the currency overvalued, as it left its key interest rate unchanged at one per cent. The central bank also noted that inflation has been lower than expected and won't return to its ideal target of two per cent until 2016.
"The depreciation in the Canadian dollar is expected to exert upward pressure on retail prices in a number of categories over the next few years," Derek Burleton, vice-president and deputy chief economist at TD Bank (TSX:TD), said in a note.
"A weaker Canadian dollar raises the prices we pay for imported goods, and these cost increases filter through to the consumer level to varying degrees."
Note to readers: This is a corrected story. An earlier version wrongly said the Canadian dollar traded Thursday morning at its lowest level in more than six years.
Read more Business News
- $6M for Innovation CentreKelowna - 11:37 am
- Sharing fruits of their labourPenticton / S. Okanagan - 3:24 pm
- Casino wants to moveBC - 2:18 pm
- NYC shootoutWorld - 2:27 pm
|QHR Technologies Inc||1.15||0.00|
|Anavex Life Sciences||0.265||-0.01|
|Copper Mountain Mining||2.97||+0.15|
|Sunrise Resources Ltd||0.02||-0.03|
|Mission Ready Services||0.19||+0.01|
Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...
The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...
The mainstream media are finally waking up to something unusual in British Columbia – a labour shortage. If the experience of Alberta is a guide to our own future, the highly skilled labour will...