TORONTO - The Canadian dollar was trading near a two-year low at midday Monday as it felt the impact of lower prices for key commodities, particularly gold and crude oil.
The loonie was down 0.13 of a cent at 94.03 cents US and earlier in the session fell below 94 cents US for the first time since October 2011.
The Canadian dollar traded as low as 93.90 cents US on Monday, according to the Bank of Montreal. The loonie hasn't been lower since Oct. 4, 2011, when it hit 93.83 US in intra-day trading before closing at 94.80 US.
Jennifer Dowty, an associate portfolio manager with CIBC Global Asset Management, said the dollar is feeling pressure as a result of dropping commodity prices, particularly gold and oil.
February bullion fell $25 to US$1,225.40 an ounce, and she forecasts this weakness will likely continue.
"The U.S. economy is steadily recovering and gold, being a safe haven, is not a place that investors need to be right now," she said. "You're seeing pressure on gold."
December copper fell three cents to US$3.17 a pound.
Crude prices saw an uptick Monday after having lost ground over the past week due to concerns over rising supplies. The January crude contract on the New York Mercantile Exchange climbed 98 cents to US$93.70 a barrel
"There is a high correlation between the price of oil and the Canadian dollar," said Dowty. "A weakness in crude has been reflected in the Canadian dollar."
Meanwhile, new figures indicated signs of continued economic recovery in the U.S.
The Institute for Supply Management says its index on U.S. manufacturing activity rose in November to 57.3 as factories increased production and hiring. That figure was up from 56.4 in October and the highest since April 2011. A reading above 50 indicates growth.
The figures also propped up data on China overnight from HSBC that showed its purchasing managers' index slipped to 50.8 in November from 50.9 in October. Typically, numbers above 50 indicate an expansion.
Although the reading was dow slightly, it was still the second-highest level in eight months and an improvement from a preliminary reading of 50.4 released earlier last month.
A day earlier, the China Federation of Logistics and Purchasing said its PMI remained at 51.4, the same as October.