Canadian dollar falls amid Chinese economic worries, positive US data
TORONTO - The Canadian dollar was lower Friday as investors looked to China to see if it will make any moves to address its economic slowdown.
The loonie fell 0.23 of a cent to 90.42 cents US.
Markets have been antsy, awaiting indications of whether China will pump more stimulus into the world's second-largest economy, which has slowed to its lowest growth rate since the financial crisis.
A preliminary reading of China's manufacturing, released Monday, showed activity at an eight-month low in March.
China has set a target of 7.5 per cent economic growth this year but says it is more concerned with creating jobs than precisely meeting the GDP figure.
Meanwhile, there was some positive news in Canada as the federal government reported a second consecutive monthly surplus in January, putting it ahead of its goal of reducing the deficit to $16.6 billion for the fiscal year.
The Finance Department says the government took in $2.16 billion more in revenue than it spent in January, following a $1.15 billion surplus the previous month â€” the best two-month performance since the recession.
For the first 10 months of its 2013-14 fiscal year, Ottawa's deficit stood at $10.5 billion compared with $13.9 billion for the same period last year.
There was also some evidence to show that the U.S. economy is gaining strength, although at a moderate pace. Americans spent slightly more in February but the modest increase may have been held back by severe winter weather.
The Commerce Department says consumer spending rose 0.3 per cent in February following a 0.2 per cent rise in January. The spending increases would have been weaker except for a surge in spending on utility bills.
Analysts say consumer spending, which accounts for 70 per cent of U.S. economic activity, has slowed significantly in the current quarter and will depress overall economic growth. But they are looking for a rebound in the second quarter.
Another report found that consumer sentiment slipped in March from the previous month as Americans said they were less likely to buy cars and homes because of slightly higher interest rates.
The University of Michigan says its consumer sentiment index dipped to 80 in March from 81.6 in February. That's still about five points higher than last fall, when sentiment fell during the government shutdown. The index was 82.5 in December.
Economists say the figures suggest confidence didn't take a big hit during the harsh winter.
Commodities were mostly higher as May crude on the New York Mercantile Exchange climbed 30 cents to US$101.58 a barrel, while May copper gained five cents to US$3.04 a pound. June bullion fell $1 to US$1,293.80 an ounce.
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