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Canadian dollars (iStockphot)
Canadian dollars (iStockphot)

Loonie drifts lower as commodities fall Add to ...

The Canadian dollar was lower while commodities fell in the wake of concerns about China’s economy.

The loonie was down 0.09 of a cent to 97.34 cents (U.S.) as traders also looked ahead to the release Wednesday of Canadian gross domestic product figures for May.

There are concerns that an overhaul of China’s industrial sector could cause a sharp slowdown in the world’s second-largest economy.

Beijing has ordered companies to close factories in 19 industries from steel to glass where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful makeover of the economy. That move followed weak manufacturing data on Wednesday.

Commodities were lower across the board as demand concerns pushed the September crude contract on the New York Mercantile Exchange down 84 cents to $104.65 a barrel.

September copper fell eight cents to $3.10 a pound and August bullion slipped $10.40 to $1,318.40 an ounce.

On the economic front, data showed U.S. consumer sentiment at a six-year high. The University of Michigan’s consumer confidence index came in at 85.1 for July.

Traders also looked ahead to a slew of top tier U.S. economic data next week, topped off by a two day meeting of the U.S. Federal Reserve that will be closely watched for any clue as to when the central bank might be thinking of trimming a key element of economic stimulus. The Fed currently spends $85-billion a month to buy bonds, a move that has kept long-term rates near record lows and supported a strong stock market rally.

But Fed chair Ben Bernanke has indicated the Fed could start cutting back on those purchases later this year if the economy improves sufficiently.

There are also reports on second-quarter U.S. gross domestic product, the health of the manufacturing sector and the week ends with the release of the U.S. non-farm payrolls report.

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