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Canadian dollar adds to sharp loss amid disappointing Chinese data

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(Globalpost/GlobalPost)

TORONTO - The Canadian dollar was slightly lower Monday amid a soft reading on the Chinese economy and generally higher commodity prices.

The loonie was off 0.1 of a cent to 89.1 cents US.

HSBC’s purchasing managers’ index for China dropped to 48.1 in March from February’s 48.5. It was the lowest reading since July 2013 and was below consensus expectations of a modest rise.

The worse-than-expected Chinese data suggested that the slowdown in the world’s second biggest economy is deepening.

But it also left markets feeling that Chinese authorities will have to take steps to meet its 7.5 per cent growth target.

Analysts say Beijing will likely introduce a series of pro-growth measures focusing on accelerating fiscal spending on infrastructure and reforms.

On commodity markets, May crude on the New York Mercantile Exchange up 40 cents to US$99.86 a barrel.

May copper gained one cent to US$2.96 a pound while April bullion shed $18.10 to US$1,317.90 an ounce.

The dollar lost about 9/10s of a US cent last week with the currency feeling pressure from two directions.

Markets were surprised after the U.S. Federal Reserve said it could start raising short-term interest rates as soon as next year.

At the same time, Bank of Canada governor Stephen Poloz said that interest rate hikes in Canada could be further away than thought.

He added that a rate cut by the Bank of Canada could not be ruled out.

http://www.globalpost.com/dispatch/news/the-canadian-press/140324/canadian-dollar-adds-sharp-loss-amid-disappointing-chinese-d