BUSINESS

Canadian dollar flat amid sliding commodities, strong China/U.S. data

11/01/2013 08:49 EDT | Updated 01/23/2014 06:58 EST
TORONTO - The Canadian dollar closed flat Friday, holding onto the previous day's solid advance despite sliding oil and gold prices.

The loonie was unchanged at 95.9 cents US.

The currency had advanced more than half a U.S. cent Thursday after Statistics Canada said that gross domestic product grew by 0.3 per cent in August against the 0.2 per cent rise that was expected.

The loonie showed little activity despite encouraging economic readings Friday in the United States and China, two major trading partners.

HSBC Corp. said its monthly purchasing managers’ index for China showed its best improvement in seven months, rising to 50.9 from September’s 50.2.

An industry group, the China Federation of Logistics and Purchasing, said its index rose to 51.4 from the previous month’s 51.1.

The Institute for Supply Management also reported that the U.S. factory sector expanded more than expected in October, rising to 56.4 from 56.2 in September. Anything above 50 indicates expansion.

The ISM data is being carefully weighed as to how it might affect the timing of the U.S. Federal Reserve in cutting back on a key stimulus program, its monthly purchases of US$85 billion of bonds.

Earlier this week, the Fed said it would carry on with the program, which is credited with keeping long term rates low and therefore encouraging more people to buy equities. But there is much speculation about when the Fed might start to taper those asset purchases.

China’s economic growth rebounded to 7.8 per cent in the three months ended in September from the previous quarter’s two-decade low of 7.5 per cent.

Strong Chinese data often helps lift commodity prices, which in turn supports the Canadian dollar.

However, commodities were lacklustre Friday with December crude on the New York Mercantile Exchange down $1.77 to US$94.61 a barrel. Crude has fallen 3.3 per cent this week following data out mid-week showing a sharp spike in U.S. supplies last week.

December copper had received an earlier boost from the Chinese data but later was unchanged at US$3.30 a pound while December bullion moved $15.50 lower to US$1,308.20 an ounce.