WN: European debt crisis worries, sinking commodity prices push Canadian dollar down
TORONTO - The Canadian dollar moved lower Thursday amid falling commodities and worries that the European debt crisis is worsening.
The loonie fell 0.25 of a cent to 97.76 cents US.
The results of a Spanish debt auction soured moods as the country paid just over seven per cent to raise €3.56 billion in 10-year bonds, the highest rate since 1997 and a level seen as unsustainable over the long term.
Demand was relatively weak and the interest rate was much higher that the 5.5 per cent that was demanded at an auction of 10-year bonds on Oct. 20.
Italian and French bond yields also rose.
Markets frustrated with the failure of Eurozone leaders to come up with a comprehensive solution to the region's government debt crisis have been demanding ever higher interest rates to buy bonds from heavily-indebted countries.
The crisis has been a huge weight on stock markets for months on worries that it will plunge Europe back into recession, possibly dragging the rest of the global economy into a downturn, and inflicting severe damage on the financial system.
The loonie was also pressured by lower prices for commodities.
Prices have been volatile because of worries that a slowing global economy will need much less oil and metals.
The December crude oil contract on the New York Mercantile Exchange dropped $1.63 to US$100.06 a barrel, giving up about half of Wednesday's gain. Prices surged in the wake of a deal involving Enbridge Inc. (TSX:ENB) that will see the Canadian pipeline company pay US$1.15 billion to buy half ownership of a U.S. pipeline system. Enbridge said the direction of crude oil flows in the Seaway pipeline will be reversed to enable it to transport oil from the main oil supply hub at Cushing, Okla., to the Gulf Coast. That would help unclog a glut of supply at Cushing, which has recently driven down the price for oil.
Metal prices also fell heavily as the December copper contract gave up seven cents to US$3.42 a pound.
Bullion prices also faded with the December contract down $28.10 to US$1,746.20 an ounce.
