Loonie pulls back further as Chinese manufacturing data gives little optimism | iNFOnews | Thompson-Okanagan's News Source

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Loonie pulls back further as Chinese manufacturing data gives little optimism

January 23, 2014 - 6:08 AM

TORONTO - The Canadian dollar was trading at its lowest level in more than six years early Thursday after a weak report on Chinese manufacturing and the Bank of Canada's latest interest decision.

The loonie dropped 0.46 of a cent to 89.73 cents U.S., after falling nearly a full cent on Wednesday following a Bank of Canada comment that was interpreted as a sign the currency may be overvalued.

The Canadian dollar hasn't been below 90 cents US since mid-2009 and hasn't been near 89.73 since April 2007, prior to the recession.

In its latest economic reading on Wednesday, Canada's central bank said it expects the Canadian dollar to remain strong and "continue to pose competitiveness challenges for Canada's non-commodity exports."

It stopped short of calling the currency overvalued, as it left its key interest rate unchanged at one per cent. The central bank also noted that inflation has been lower than expected and won't return to its ideal target of two per cent until 2016.

"If it was the BoC's intention to ease some of the pressure on the Canadian dollar, it was certainly not the tonic needed," wrote Mark Chandler, head of Canadian FIC Strategy at RBC Dominion Securities.

Meanwhile, the results of HSBC's preliminary survey of Chinese factory purchasing managers in January fell below the level indicating expansion for the first time since July.

The report came days after data showed China's economy slowed in the final quarter of 2013.

In commodities, the February gold bullion contract rose $9 to US$1,248.50 an ounce.

The March crude oil contract on the New York Mercantile Exchange gained 31 cents to US$97.04 a barrel.

News from © The Canadian Press, 2014
The Canadian Press

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