TORONTO - The Canadian dollar closed sharply lower Tuesday with markets turning cautious at the end of the session as the United States and European Union adopted tough new sanctions on Russia over that country's continued support of Ukrainian rebels, who have been blamed for the downing of an airliner by a missile earlier this month.
The loonie declined 0.5 of a cent to 92. cents US.
The new measures specifically target sectors of the Russian economy, including energy, weapons and finance. Also, Russian state-owned banks will be banned from selling bonds or equities with a maturity of over 90 days in European capital markets.
The greenback had initially strengthened mid-morning on the back of a strong reading on consumer confidence.
The U.S. Conference Board reported that its Consumer Confidence Index jumped to 90.9 in July from 85.2 in the prior month. It's the highest level since October 2007.
Other data showed that U.S. home prices rose in May from a year earlier at the weakest pace in 15 months. The Standard & Poor’s/Case-Shiller 20-city home price index increased 9.3 per cent in May, down from 10.8 per cent in the previous month.
Meanwhile, the U.S. Federal Reserve started its two-day meeting on interest rates.
The Fed is expected to keep its key interest rate near zero for some time to come. But while markets have generally expected the Fed to move in mid-2015, economic performance has improved to a point where it is thought the central bank could move earlier.
Elsewhere on the economic front, on Wednesday traders will take in the latest economic growth readings from Canada and the U.S. That will be followed by a report Thursday on China’s manufacturing industry that will give investors an update on the health of the world’s second biggest economy.
And on Friday, the U.S. will release its monthly jobs data. Analysts estimate that the U.S. labour market added between 235,000 and 255,000 jobs in July.
On the commodity markets, the September crude contract in New York was down 70 cents to US$100.97 a barrel.
September copper eased two cents to US$3.23 a pound while August bullion faded $5 to US$1,298.30 an ounce.