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Canadian dollar, commodities slide ahead of Chinese economic growth data

Canadian dollar coins, or loonies, are shown in Ottawa on Oct. 10, 2008. THE CANADIAN PRESS/Sean Kilpatrick
July 12, 2012 - 8:35 AM

TORONTO - The Canadian dollar was lower Thursday as commodities retreated on worries that a slowing global economic recovery will cut demand for oil and metals.

The currency was down 0.35 of a cent to 97.7 cents US after the U.S. Federal Reserve signalled conditions don't warrant another round of economic stimulus right now. And traders were braced for more data from China showing the world's second-largest economy slowing faster than thought.

The August crude contract on the New York Mercantile Exchange down $1.28 to US$84.53 a barrel.

Crude has plummeted from US$106 in May amid expectations that a global slowdown led by Europe, the U.S. and China will undermine oil demand.

Copper prices slid five cents to US$3.39 a pound while bullion gave back $14.10 to US$1,561.60 an ounce.

There had been hopes that the minutes of the most recent Federal Reserve meeting would indicate the Fed may engage in a third round of securities purchases aimed at increasing the supply of money in the economy, so-called quantitative easing.

The minutes showed members might be open to more stimulus but only after more signs that the U.S. recovery is losing momentum.

Market-watchers concluded that meant no likely action at the Fed’s next meeting July 31-Aug. 1.

There was also a degree of suspense a day before the release of the latest Chinese economic growth data.

Data are expected to show growth in the three months ending in June fell as low as 7.3 per cent, down from the previous quarter’s nearly three-year low of 8.1 per cent. That is in line with this year’s official 7.5 per cent target. But revenues for companies in construction, shipbuilding and export manufacturing are down by up to half compared with a year ago.

The slowdown is a setback for economies around the world that were looking to China to drive demand for exports and support global growth.

News from © The Canadian Press, 2012
The Canadian Press

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