05/14/2013 08:51 EDT | Updated 07/14/2013 05:12 EDT

Canadian dollar weakens on falling commodity prices, softer world markets

TORONTO - The Canadian dollar fell Tuesday as commodities continued to trade lower after beginning the week in negative territory.

The loonie was down of 0.58 of a cent to 98.33 cents US.

The June crude oil contract dipped 96 cents to US$94.21 a barrel, June gold bullion dropped $9.80 to US$1,424.50 an ounce and July copper dipped eight cents to US$3.28 a pound.

Gareth Watson, vice-president of the investment management group at Richardson GMP Ltd., said he's been surprised by the "strength and resiliency" of the loonie. The currency has seen small declines but has not dipped as low as its international counterparts, such as Australia's dollar.

He said perhaps this was an indicator that what's good news for the U.S. is also good news for Canada.

"Maybe it's a reflection of the fact that we basically follow the States in terms of economic activity and if the United States is doing better than they were 12 months ago, then hopefully the Canadian economy would benefit from that," Watson said.

He added that he doesn't foresee a steep drop in the value of the loonie in the next few months, unless of course, there is a "significant" drop in commodity prices.

Meanwhile, overseas markets showed little reaction to a surprising one per cent rise in industrial production among the 17 European Union countries that use the euro, a possible sign that the recession in the eurozone may have ended.

The first estimate of the region's gross domestic product in the first three months of 2013 is due for release Wednesday.

In Europe, Germany's DAX rose 0.6 per cent to 8,325 while the CAC-40 in France was 0.3 per cent higher at 3,956. The FTSE 100 index of leading British shares was up 0.6 per cent at 6,671.

Earlier in Asia, Japan's Nikkei 225 index fell 0.2 per cent to close at 14,758.42 — a modest retreat following two spectacular sessions that have seen the index rise to five-year highs.

The index has soared more than 42 per cent since the beginning of the year as the yen has dropped sharply in response to the Bank of Japan's aggressive monetary stimulus program.

South Korea's Kospi added one per cent to 1,968.83 while Hong Kong's Hang Seng shed 0.3 per cent at 22,930.28. In mainland China, the Shanghai Composite Index fell 1.1 per cent to 2,217.01. The Shenzhen Composite Index fell 1.4 per cent 960.81.