Republished October 16, 2014 - 1:26 PM
Original Publication Date October 16, 2014 - 5:50 AM
TORONTO - The Canadian dollar erased early losses to move higher as the U.S. dollar weakened somewhat and oil prices bounced off the US$80 a barrel level.
The loonie closed up 0.07 of a cent at 88.9 cents US after going as low as 88.02 cents US as traders sought safety in the U.S. dollar amid volatile markets and data showing a steep slide in Canadian manufacturing shipments in August.
Statistics Canada reported manufacturing sales fell 3.3 per cent to $52.1 billion in August, the first decline of 2014.
The agency said the loss was mainly due to lower sales of motor vehicles and motor vehicle parts. Economists had expected a drop of 1.6 per cent, according to Thomson Reuters.
Markets have been volatile and commodity-based currencies such as the loonie have sustained losses amid worries about a faltering global economy.
"Disinflationary pressures warn of more slack in the global economic outlook than expected, complicated by Ebola and geopolitical risks," observed Camilla Sutton, chief FX strategist and managing director at Scotiabank Global Banking and Markets.
"Soft U.S. data yesterday, including disappointing retail sales... served to fuel fears."
The flight to safety has been reflected in sharply lower bond yields in recent days. The benchmark 10-year U.S. Treasury yield was well off its session lows and, at late afternoon, stabilized with the yield on the 10-year Treasury note little changed at 2.15 per cent.
Canada's commodity-sensitive currency has also felt the weight of falling prices for metals and particularly crude oil, which fell below the key US$80 a barrel level Thursday morning amid reports of increasing supplies and a faltering global economy that has dampened demand prospects. Prices bounced back and November crude rose 92 cents to US$82.70 a barrel.
Meanwhile, other commodities were lower Thursday as the December gold bullion contract faded $3.60 to US$1,241.20 an ounce while the December copper contract lost three cents to US$2.98 a pound.
News from © The Canadian Press, 2014