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Canadian dollar moves lower amid mixed economic data, falling oil prices

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(Globalpost/GlobalPost)

TORONTO - The Canadian dollar closed lower Wednesday as traders balanced strong European economic data with another report that showed a deepening slowdown in China's manufacturing sector.

The loonie gave up early gains to move down 0.29 of a cent against the U.S. dollar to 96.94 cents US.

The greenback strengthened in the wake of positive news on new home sales and a report by financial information company Markit that put the July flash purchasing managers’ index for the U.S. manufacturing sector at 53.2, the highest reading in four months.

Meanwhile, an HSBC survey showed China’s manufacturing at an 11-month low this month, a disappointing performance that puts pressure on Chinese leaders to reverse a deepening slowdown in the world’s second-largest economy. HSBC said the preliminary version of its monthly purchasing managers index declined to 47.7 this month from June’s 48.2 on a 100-point scale on which numbers below 50 show a contraction in activity.

"While government officials have done their best to clarify they won’t allow growth to fall below seven per cent, markets likely won’t be convinced that’s the case until the economic data stabilizes," said BMO Capital Markets senior economist Benjamin Reitzes.

Meanwhile, Markit said a broad gauge of economic activity in the eurozone rose for a fourth month in a row. Its monthly purchasing managers’ index for the 17-country currency union rose to 50.4 points in July from 48.7 the previous month. Anything above 50 indicates an expansion.

Oil prices declined amid the weak Chinese manufacturing data and another report showing further drops in crude inventories.

The September crude contract on the New York Mercantile Exchange was down $1.84 to US$105.39 a barrel amid a slightly bigger than expected drop in U.S. crude inventories. Energy Department data showed supplies dropped by 2.8 million barrels last week, against the 2.6 million barrel drop that had been expected. Inventories have headed sharply lower over the past four weeks, supporting a 10 per cent rise in prices this month.

Metal prices also declined with September copper down two cents to US$3.18 a pound while August bullion declined $15 to US$1,319.70 an ounce.

Other economic news showed that Americans snapped up new homes in June at the fastest pace in five years. The Commerce Department says sales rose 8.3 per cent to a seasonally adjusted pace of 497,000. That’s up from 459,000 in May, which was revised lower.

http://www.globalpost.com/dispatch/news/the-canadian-press/130724/canadian-dollar-rises-amid-strong-european-data-mixed-commod