Newspaper article The Canadian Press

Loonie Heads Lower amid Weakened Gold, Larger Debt Loads in Canada

Newspaper article The Canadian Press

Loonie Heads Lower amid Weakened Gold, Larger Debt Loads in Canada

Article excerpt

Loonie lower amid weak commodities

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TORONTO - The Canadian dollar headed lower Friday as commodities, particularly gold prices, continued to decline.

The loonie dipped 0.20 of a cent to 96.65 cents US.

The Canadian dollar, which has recently seen strength against a weakening U.S. dollar, has been under pressure in the last few days as worries over Syria have eased and commodity prices have waned.

Earlier this week, the Syrian government agreed to hand over its chemical weapons stockpile in an effort to avoid a U.S. military strike. Top U.S. and Russian diplomats are holding talks in Geneva to discuss the specifics.

Uncertainty over whether the U.S. would attack the Middle Eastern country had unsettled markets, but now that a diplomatic solution seems to be in the works investors are regaining confidence.

In turn, this has caused commodities to fall. Generally, people flock to gold in times of political crisis.

Gold prices continued to fall Friday after closing at their lowest level in a month on Thursday. December bullion dropped $22 to US$1,308,60 an ounce, while December copper was down a penny at US$3.20 a pound.

The October crude contract dipped 39 cents to US$108.21 a barrel.

"The Canadian dollar, most of the time, is driven by commodity prices, the state of the U.S. dollar and interest rate differentials with the U.S.," said Bob Gorman, chief portfolio strategist with TD Waterhouse.

"The relatively high price of oil has been supportive of the Canadian dollar as of late... but if we, in fact, see some ebbing of those concerns in the Middle East, we will see the Canadian dollar will drift a little lower."

Meanwhile, the U.S. Commerce Department reported that Americans boosted their spending at retail businesses only modestly in August, indicating that economic growth remains sluggish. Consumers bought more cars, furniture and electronics last month but held back on most other purchases.

Spending at businesses rose just 0.2 per cent last month -- the smallest gain in four months. But the government said retail spending was stronger in the previous month than first estimated, revising the July estimate to 0. …

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