Greek debt woes, lower commodity prices push Canadian dollar lower

TORONTO - The Canadian dollar was lower Tuesday amid falling commodities while Greek leaders continued to hold talks aimed at getting a vital second bailout arranged.

The loonie dropped 0.21 of a cent to 100.25 cents as commodity prices fell back and nervous traders seeking safety bought into U.S. Treasuries.

Prime Minister Lucas Papademos and the heads of the three parties backing Greece’s interim government were to try again Tuesday to thrash out a deal on new austerity measures needed to get vital bailout cash.

Greece’s eurozone partners and the International Monetary Fund are demanding new income cuts and job losses to keep the country’s rescue loans flowing.

With a general election scheduled to take place within a few months, political leaders are fretting about the impact on their fortunes of signing up to a deal that imposes more hardship on Greece’s population.

Athens must placate its creditors to clinch a €130 billion bailout deal from the eurozone and the IMF and avoid a March default on its bond repayments.

Without an injection of emergency money, Greece will likely default on its bond repayments on March 20 — an event that could shake European banks and other private lenders with Greek debt on their books.

Demand concerns and the higher greenback depressed commodity prices.

A stronger greenback usually helps depress oil and metal prices, which are denominated in dollars, as it makes commodities more expensive for holders of other currencies.

The March crude contract on the New York Mercantile Exchange dropped 79 cents to US$96.12 a barrel on analyst estimates that crude inventories likely rose about 2.3 million barrels last week.

The American Petroleum Institute announces its weekly supply data later Tuesday while the Energy Department’s Energy Information Administration reports its figures Wednesday.

Crude supplies in the U.S. have increased for the past three weeks at a key Cushing, Oklahoma delivery point amid a mild U.S. winter.

Copper prices also gave back gains with the March contract down six cents to US$3.81 a pound.

The April bullion contract on the Nymex declined $9.50 to US$1,715.40 an ounce.

Poor economic data from Germany also cast a shadow over markets.

Industrial production in Europe’s biggest economy fell 2.9 per cent in December from the month before, suggesting the country’s economic slowdown could be worse than expected.

The government has cut its estimate for 2012 growth from one per cent to 0.7 per cent as the crisis over too much government debt in some countries weighs on Germany and its trade partners in the 17-nation eurozone.

Traders also looked to U.S. Federal Reserve chairman Ben Bernanke and his testimony later in the morning before the Senate Banking Committee.