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Canadian dollar declines amid higher oil prices, sliding Japanese growth

Canadian dollars (loonies) are pictured in Vancouver, B.C., Sept. 22, 2011. THE CANADIAN PRESS/Jonathan Hayward

TORONTO - The Canadian dollar was little changed Monday amid higher oil prices and little in the way of economic news.

The loonie slipped 0.05 of a cent to 100.86 cents US.

There was some disappointment with data showing that Japan’s economy grew by only 0.3 per cent in the second quarter from the previous three-month period, half the rate that was expected. It was also sharply lower from the first quarter’s upwardly revised rate of 1.3 per cent.

The stall reflected the fallout from Europe’s debt crisis and the sharp rise in the value of the yen, which makes it more difficult for the country’s export sector to compete in the international marketplace.

The data followed news Friday that export growth in China during July plunged to just one per cent from the previous month’s 11.3 per cent, which was well below forecasts of about five per cent.

But the dismal report helped fuel speculation that China’s central bank was preparing to act with some type of measure to spur business activity.

Investors are also hoping to see further stimulus action from the U.S. Federal Reserve. They are also counting on the European Central Bank to do whatever is necessary to keep the continent's monetary union intact.

Oil prices advanced as investors awaited the release of U.S. retail sales figures for July.

Benchmark crude for September delivery was up 72 cents at $93.59 a barrel on the New York Mercantile Exchange. Analysts say attention this week will focus partly on U.S. retail sales as an indicator of whether demand for crude could increase or slacken. That report comes out Tuesday before the market open.

Crude prices retreated Friday after the International Energy Agency lowered its forecast for global crude demand for the year to 89.6 million barrels a day from 89.9 million due to a "combination of persistently high prices and a weak economic backdrop."

Other commodities were mixed with September copper on the Nymex off another three cents to US$3.37 a pound. Copper slipped three cents Friday in the wake of the disappointing Chinese data. China is the biggest consumer of the metal.

December gold gained $1 to US$1,623.80 an ounce.

Other highlights of the economic calendar this week include the June reading on Canadian manufacturing shipments. Statistics Canada was expected to report a rise of 0.3 per cent following a 0.4 per cent dip in May. In addition, the July Consumer Price Index report comes out Friday. Economists expect the data to show a 0.2 per cent rise from the previous month.

Traders will also take in the first estimate of second quarter economic growth in the 17-country eurozone on Tuesday.

News from © The Canadian Press, 2012
The Canadian Press

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