Canadian dollar closes at five month low amid soft Chinese inflation data
Posted Sep 11, 2014 08:32:31 AM.
This article is more than 5 years old.
TORONTO – The Canadian dollar tumbled almost a full U.S. cent Thursday to its lowest close in over five months amid soft Chinese economic data.
The loonie fell 0.93 of a cent to 90.52 cents US, its lowest close since March 31, as weaker than expected Chinese inflation pressured commodity-based currencies such as the loonie.
China’s consumer inflation eased in August amid signs of cooling economic growth. Prices rose two per cent from a year earlier, down from July’s 2.3 per cent increase. The rise in consumer prices was well below the government’s target for the year of 3.5 per cent and raised fresh questions as to whether Beijing might try to shore up economic growth.
The Chinese data also helped depress the December copper contract, which was down two cents to US$3.09 a pound.
Markets also considered a forecast of sharply lower demand for crude oil.
The International Energy Agency expects global oil demand to grow by 900,000 barrels a day in 2014, a decrease of 65,000 barrels a day compared with last month’s forecast and down by 300,000 barrels a day since July.
The IEA blames economic weakness in Europe and China.
The October crude contract in New York erased early losses to move up $1.16 to US$92.83 a barrel after closing at an eight-month low Wednesday as the Organization of the Petroleum Exporting Countries (OPEC) announced it was cutting production amid slow growth and increasing U.S. production.
Elsewhere on the commodity markets, December gold faded $6.30 to US$1,239 an ounce.
The loonie has tumbled about 1 1/2 U.S. cents so far this week.
The greenback had strengthened against the Canadian currency as traders await the U.S. Federal Reserve’s scheduled interest rate announcement next Wednesday, when analysts think the central bank could be set to change to a more hawkish tone on interest rates.
Markets have generally expected the Fed to start hiking short-term rates around the middle of next year, but there has been much speculation that an improving U.S. economy would encourage the central bank to move earlier.
Meanwhile, the Scottish independence referendum Sept. 18 has provided markets with a good helping of uncertainty.
Note to readers: This is a corrected story: A previous version gave an incorrect figure for the closing price of oil
