Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A file photo of a loone being inspected as it comes off the press at the Royal Canadian Mint in Winnipeg on Wednesday, October 14, 2009. (John Woods/For The Globe and Mail/John Woods/For The Globe and Mail)
A file photo of a loone being inspected as it comes off the press at the Royal Canadian Mint in Winnipeg on Wednesday, October 14, 2009. (John Woods/For The Globe and Mail/John Woods/For The Globe and Mail)

Loonie stays flat as markets continue fall Add to ...

The loonie was relatively unchanged against its U.S. counterpart Friday following lower-than-expected Canadian inflation data and an economic update from Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney.

The Canadian dollar headed 0.02 of a cent lower to close at 101.15 cents U.S.

It had made gains earlier after a Statistics Canada report showed inflation last month was lower than economists expected.

Gold reached new heights Friday, at one point soaring as high as $1,881 (U.S.) an ounce as uncertainty about the global economy had anxious investors again snapping up the precious metal. By close, the price had backed off slightly but was still up $30.20 at $1,852.20.

Copper prices added 2 cents to $3.99 a pound.

Oil lost 12 cents to $82.26 a barrel , down about 4 per cent for the week. Crude got some support Friday from a weaker dollar, which hit its lowest against the Japanese yen since the Second World War.

Oil and other commodities are priced in dollars, so a weaker dollar makes them cheaper for traders who use other currencies. Oil lost some ground by the end of the day as the dollar got a little stronger.

Mr. Carney told the House of Commons finance committee that the U.S. is not headed toward another recession but is facing its weakest recovery since the depression.

“Recent events serve as a reminder that, in a world awash with debt, repairing the balance sheets of banks, households and countries will take years,” Mr. Carney said.

“As a consequence, the pace, pattern and variability of global economic growth is changing and Canada must adapt. In short, the considerable external headwinds that the bank has long identified are now blowing harder.”

Finance minister Jim Flaherty told the committee that the current global economic turmoil will impact the Canadian economy, but so far his budget projections remain on track.

“While Canada experienced greater than expected growth in the first quarter, that is expected to be balanced out by a softer than anticipated second quarter,” the minister said.

Mr. Flaherty and Mr. Carney were called to testify before the committee after two weeks of frenzied trading on stock markets.

In its July monetary policy report, the central bank forecast the Canadian economy would grow 1.5 per cent in the second-quarter, but the governor said Friday the bank now expects minimal growth or even a slight contraction in the economy in the quarter due to the global slowdown.

The testimony by the two men came as Statistics Canada reported the pace of inflation eased in July as increases in the price of gasoline slowed.

The consumer price index rose at a annual pace of 2.7 per cent in July, down from a 3.1 per cent increase for June, giving the central bank room to keep interest rates at their exceptionally low levels, economists said.

It was the first time that inflation has been below a pace of 3 per cent since February. Core inflation, which excludes a number of highly volatile items, remained below the Bank of Canada’s target of 2 per cent.

“The tame core reading will buy the Bank of Canada time to remain on the sidelines and is clearly no obstacle for rate cuts should global recession risks intensify,” said Sal Guatieri, senior economist at BMO Capital Markets.

Follow us on Twitter: @GlobeBusiness

 
  • CAD/USD-I
  • GC-FT
  • HG-FT
  • CL-FT
Live Discussion of CAD/USD on StockTwits
More Discussion on CAD/USD-I
Live Discussion of GC on StockTwits
More Discussion on GC-FT
Live Discussion of HG on StockTwits
More Discussion on HG-FT
Live Discussion of CL on StockTwits
More Discussion on CL-FT

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories