Loonie down slightly as commodity prices veer sharply lower

The Canadian dollar closed lower Thursday as a strengthening U.S. greenback helped push commodity prices sharply lower and traders await the latest reading on the health of the Canadian economy.

The loonie slipped 0.03 cents (U.S.) to 89.33 cents.

Statistics Canada is expected to report Friday that gross domestic product for August came in flat.

Data released Thursday showed U.S. growth in the July-September period came in at an annualized pace of 3.5 per cent, better than the 3-per-cent gain economists had expected.

Commodity prices were lower with gold prices under particular pressure after the U.S. Federal Reserve on Wednesday said its third instalment of quantitative easing would conclude by month's end.

The massive program of buying bonds and mortgage-backed securities was seen as a huge benefit to stock markets in the years following the 2008 financial crisis as it kept long-term rates low. However, the Fed also said it would continue to keep short-term rates low for a "considerable period."

Quantitative easing also helped support higher gold prices because of worries the stimulus program would stoke inflation. But inflation has remained tame and the December gold contract dropped $26.30 Thursday to $1,198.60 an ounce.

Commodity prices also suffered from a higher U.S. dollar. A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are dollar-denominated.

The December crude oil contract lost $1.08 to $81.12 a barrel while the December copper contract was down 4 cents to $3.06 a pound.