The Canadian dollar closed lower Tuesday amid sliding commodity prices and data showing a gain in retail sales in July.
The loonie ended down 0.16 of a cent at 97.07 cents (U.S.).
Statistics Canada said retail sales rose by 0.6 per cent in July to $40.3-billion (Canadian). 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 data was led by a 3.2-per-cent rise in sales at gasoline stations, the third consecutive month of gains at gasoline stations.
Sales of motor vehicles and parts dropped 0.6 per cent in July following six successive monthly gains.
“Over the past little while, you have seen a dramatic decline in the pace of household debt growth,” said Francis Fong, an economist at Toronto-Dominion Bank.
“It’s almost as if Canadian households are being pro-active 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 pro-active 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 $102.72 a barrel. Oil has dropped more than 6 per cent since closing at a two-year high of $110.53 on Sept. 6.
Metal prices also fell back with December copper down 4 cents to $3.26 a pound.
December gold bullion faded $10.70 to $1,316.30 an ounce.