TORONTO - The Canadian dollar closed lower Tuesday amid sliding commodity prices and data showing a gain in retail sales in July.
The loonie was down 0.16 of a cent at 97.07 cents US.
Statistics Canada said retail sales rose by 0.6 per cent in July to $40.3 billion. That met economists' expectations and followed a decline of 0.6 per cent in June that was largely attributed to severe flooding in Alberta and a construction sector strike in Quebec.
Statistics Canada said the advance in retail sales was led by a 3.2 per cent rise in sales at gasoline stations, the third consecutive month of higher sales at gasoline stations.
Sales of motor vehicles and parts dropped by 0.6 per cent in July following six, straight monthly gains.
"Over the past little while, you have seen a dramatic decline in the pace of household debt growth," said Francis Fong, economist at TD Bank.
"It’s almost as if Canadian households are being proactive in sort of holding back their spending. That’s not to say they’re spending at a poor pace — we’re still seeing pretty consistent gains in consumer spending — but there is this notion that households are being more proactive in that regard."
Meanwhile, worries about the economic fallout from a budgetary impasse in Washington pressured commodity prices.
The U.S. government will reach its borrowing limit, or debt ceiling, by Oct. 1. If Congress doesn’t raise that limit, the government won’t be able to pay all its bills.
Republicans are demanding that any increase must result in expenditure cuts of an equal amount. President Barack Obama is demanding a debt limit increase with no conditions attached.
The November crude contract on the New York Mercantile Exchange lost 46 cents to US$102.72 a barrel. Oil has dropped more than six per cent since closing at a two-year high of $110.53 on Sept. 6.
Metal prices also fell back with December copper down four cents to US$3.26 a pound.
December gold bullion faded $10.70 to US$1,316.30 an ounce.