Loonie lower: traders look to U.S. government shutdown, debt ceiling talks
Oct 3, 2013 / 12:44 am
TORONTO - The Canadian dollar closed slightly lower Wednesday amid no sign of a break in Washington's budget impasse, which has forced a partial shutdown of U.S. government operations and undermined confidence in the U.S. economy.
The loonie was down 0.06 of a cent to 96.79 cents US, off early lows as prices for oil and copper turned positive.
Gold also made strong gains as the Washington standoff made the precious metal attractive as a safe haven investment.
Market reaction to the partial government shutdown, which started Tuesday, has been relatively muted on hopes that it won't last too long.
But there is growing dismay that the standoff on Capitol Hill shows no signs of easing, with some lawmakers in both parties suggesting the shutdown might last for weeks.
Adding to the grim mood was a deadline of Oct. 17 when the U.S. hits its debt limit.
On commodity markets, the November crude oil contract on the New York Mercantile Exchange up $2.06 to US$104.10 a barrel.
December copper was four cents higher at US$3.32 a pound while December bullion gained $34.60 to US$1,320.70 an ounce.
On the economic front, payroll firm ADP reported that the U.S. private sector created 166,000 jobs last month, lower than the 178,000 that had been expected.
Meanwhile, there was an important sign that Italy's government would survive a confidence motion following a decision by former premier Silvio Berlusconi to back the administration. Berlusconi had earlier said his party wouldnâ€™t support Prime Minister Enrico Letta's ruling coalition.
And the European Central Bank kept its key interest rate at a record low 0.5 per cent, holding off on more stimulus for the economy of the 17-member euro currency union as it monitors the tentative recovery.
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