BUSINESS

Loonie declines, ECB stimulus talk strengthens greenback, pushes oil lower

11/06/2014 08:26 EST | Updated 01/06/2015 05:59 EST
TORONTO - The Canadian dollar closed lower Thursday as the greenback strengthened amid a renewed commitment from the European Central Bank to keep the eurozone economic recovery on the rails.

The loonie was down 0.28 a cent to 87.52 cents US.

The euro fell back and the U.S. dollar advanced after European Central Bank head Mario Draghi said the bank is preparing the groundwork for further stimulus measures "if needed" for the struggling European economy.

Draghi has said the ECB could engage in further unconventional measures, such as large-scale bond purchases to pump newly created money into the economy, if the economic situation worsens. But the ECB has held off, in part because of skepticism about the measure in Germany, the eurozone's largest and most influential member.

Traders also looked ahead to key economic data being released Friday — the latest employment data for Canada and the U.S.

Economists expected Statistics Canada to report a loss of about 8,000 jobs last month following a surge in job creation the previous month when the economy cranked out 74,000 jobs.

In the U.S., the forecast calls for the economy to have created about 228,000 jobs on top of the 248,000 positions from September.

The dollar has had a volatile week, driven down to five-year lows while the greenback appreciated sharply as the Federal Reserve's program of quantitative easing came to an end and mid-term U.S. election results showed the Republicans regaining control of Congress.

Also, oil prices fell sharply amid a move by Saudi Arabia to cut prices for its American customers in order to compete with a surge in oil production in the United States.

The price cut and a stronger U.S. dollar cut crude prices this week to three-year lows before stabilizing on Wednesday.

On Thursday, the December crude contract in New York was down 77 cents to US$77.91 a barrel.

Prices are down sharply from the US$105 a barrel level hit during the summer due to increased supply and global economic concerns.

There was another indication of weak performance in the eurozone as German factory orders rose only slightly in September, failing to make up for a sharp drop the month.

The Federal Statistical Office said that orders rose 0.8 per cent over August, following a revised 4.2 per cent drop that month over July. Following an economic contraction of 0.2 per cent in the April-June period, analysts say Germany needs to post a strong rebound in September to avoid another drop in the third quarter, which would technically put Europe's largest economy in a recession.

December gold lost $3.10 to US$1,142.60 an ounce while December copper edged a cent higher to US$3.02 a pound after two days of declines.