BUSINESS

Canadian Dollar Loses Half A Cent Against USD On Concerns About Chinese Slowdown

03/20/2012 09:41 EDT | Updated 05/20/2012 05:12 EDT
TORONTO - The loonie lost just nearly half a cent against its U.S. counterpart Tuesday as commodity prices fell amid signs of slowing growth in China that could hamper demand for resources.

The Canadian dollar was down 0.44 of a cent at 100.83 cents after closing above the 101 cent threshold Monday.

On Tuesday, China raised the price of retail gasoline for the second time in two months.

"China’s decision to raise fuel cost for the second time in six weeks, is weighing on markets as it could dampen economic growth. Accordingly, markets are shedding risk with equities lower, commodities weak, bond yields generally lower and a strong USD," Scotiabank said in its Daily Foreign Exchange Update.

Meanwhile, home prices dropped in 45 Chinese cities in February as the government moved to cool property speculation. And mining giant BHP Billiton said Tuesday that it expects iron ore demand in China will flatten somewhat.

Gold bullion resumed its recent downward trend after a double-digit gain Monday, falling $20.30 to US$1,647 an ounce. Copper prices dropped eight cents to US$3.83 a pound. The April oil contract lost $2.48 to US$105.61 a barrel.

A stronger U.S. dollar usually depresses commodity prices, which are denominated in the currency, as it makes them more expensive for holders of other currencies.

Meanwhile, the U.S. Commerce Department said builders started work on slightly fewer homes in February, but they began preparing for what could be the healthiest spring buying season since the housing bubble burst.

Builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month, down 1.1 per cent from January.

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