RTTN: Canadian Dollar Weakens As Crude Prices Extend Decline
The Canadian dollar edged lower against its major rivals in early New York deals on Tuesday as the price of crude oil, Canada's key export, continued to move lower on demand growth concerns and a steady US dollar.
Barclay's, in its recent report, said China's oil demand growth has eased from 8 percent year-on-year between September last year to January to around 3 percent between February and April. The bank expects Chinese oil demand to grow 5 percent this year.
Earlier today, the International Energy Agency, in its monthly Oil Market Report, inched up oil demand projection by 65,000 bd to 90.6 mbd for 2013.
Light Sweet Crude Oil (WTI) futures for June delivery, slipped $0.46 to $94.71 a barrel. Yesterday, oil ended lower mostly on demand growth concerns after a sharp decline in refined crude output for April in China and some soft economic data out of the world second largest economy.
Investors also weighed speculations the U.S. Federal Reserve will cut back on its quantitative easing program following some upbeat macroeconomic data out of the country, including lower employment levels reported last week.
Crude processing in China dived to its lowest level in eight months with April output dropping to 9.36 barrels a day, reports the Chinese National Bureau of Statistics. The decrease has been largely attributed to maintenance.
The euro was under pressure in early deals as disappointing German ZEW survey results, which showed that German economic sentiment remained below expectations in May.
A survey by the Centre For European Economic Research (ZEW) showed today that its economic sentiment gained 0.1 points compared to the previous month and is now hovering at the 36.4 points-mark. This was below forecast for a reading of 40.
Meanwhile, the Eurozone industrial production growth accelerated more than expected in March, largely due to an increase in energy output, the Eurostat reported today. Industrial output advanced 1 percent month-on-month in March, bigger than the 0.3 percent rise seen in February and the 0.5 percent growth forecast by economists.
Industrial production decreased 1.7 percent on a yearly basis, but much slower than the 3.2 percent fall seen in February and the consensus forecast of 2 percent decline, the statistical office said.
Import prices in the U.S. fell in line with economist estimates in the month of April, according to a report released by the Labor Department today. The report said imports prices fell by 0.5 percent in April following a revised 0.2 percent drop in March. Economists had expected import prices to match the 0.5 percent decrease originally reported for the previous month.
At the same time, the Commerce Department said export prices slid 0.7 percent in April compared to a revised 0.5 percent decrease in March. Export prices had been expected to edge down by 0.1 percent.
The Canadian dollar slipped back to below the 1.0150 against the US dollar immediately following the release of the U.S. import price report. The loonie slipped to a fresh 2-week low of 1.0157 against the greenback around 8:35 am ET, down by more than 0.5 percent from yesterday's close of 1.0105.
The Canadian currency fell to a 4-day low of 100.08 against the yen, shedding almost 1 percent from yesterday's fresh multi-year low of 101.05. The next likely support for the loonie-yen pair is seen around the 99.80 area.
The Canadian dollar also reached a 4-day low of 1.3170 against the euro around 8:35 am ET, down almost 0.7 percent from yesterday's fresh 5-week high of 1.3068. If the loonie extends downtrend, 1.32 is seen as the next likely support level in the near-term.
