Canadian dollar drops following string of gains amid weak China trade data
The Canadian dollar closed lower Wednesday, losing some ground after a strong rally amid weak Chinese trade data.
The loonie declined 0.48 of a cent to 91.5 cents US, amid data showing that Chinaâ€™s exports fell 6.6 per cent from a year earlier, well below analystsâ€™ expectations of single-digit growth. Imports contracted by 11.3 per cent.
In a speech Thursday, China's Premier Li Keqiang said the foundation for growth is â€œnot strongâ€ and the economy still faces â€œdownward pressure.â€ But he ruled out additional short-term stimulus.
The Canadian dollar jumped 0.42 of a cent Wednesday as the release of the minutes of the last Federal Reserve meeting eased concerns about the pace of interest rate hikes and pushed the greenback lower.
But the loonie has enjoyed a series of sharp runups, advancing about three per cent to a three-month high just since March 20. Analysts point to a variety of factors, including positive readings on gross domestic product, inflation, labour and trade and a Bank of Canada business outlook survey earlier this week that confirmed that businesses are increasingly optimistic as the impact of a weak Canadian dollar combines with a U.S. recovery to support growth.
Traders are now looking ahead to next week and the Bank of Canada's latest interest rate announcement which will come out on Wednesday.
Sluggish Chinese data helped push the April crude contract on the New York Mercantile Exchange down 20 cents to US$103.40 a barrel.
Copper was up a cent at $3.05 a pound but the metal has already fallen 11 per cent this year due to lower expectations for Chinese economic growth.
Bullion prices headed higher with the June contract up $14.60 to US$1,320.50 an ounce.
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