The Canadian dollar closed slightly lower Wednesday due to a softening in world markets and lower commodity prices, particularly copper. The loonie was down 0.02 of a cent at 98.31 cents (U.S.).
The price of July copper dipped 2 cents to $3.26 a pound, signalling a weakening outlook for China and Europe and leaving the Canadian dollar vulnerable to more declines. The loonie was close to parity with the U.S. greenback just last week.
The June crude contract was up 9 cents at $94.30 a barrel, while June gold bullion fell $28.30 to $1,396.20 an ounce – its lowest price in a month.
Meanwhile, a report from the C.D. Howe Institute called for incoming Bank of Canada governor Stephen Poloz to consider raising interest rates.
Economist Paul Masson, a former special adviser to the central bank, said increasing rates may boost the value of the Canadian currency and set back exports, but with the U.S. economy in recovery mode and the dollar already below parity, the manufacturing sector can cope with a modestly stronger loonie.
Weak economic data across the euro zone also pushed European stocks lower, as news hit that the 17-country currency bloc is now in its longest-ever recession.
Europe’s economic motor, Germany, returned to growth but still disappointed. Its gross domestic product rose 0.1 per cent in the first quarter of the year. That’s less than the 0.3 per cent rise analysts had been expecting. There were also signs that the French economy has also fallen back into a recession.