TORONTO - The loonie lost just over half a cent against its U.S. counterpart as commodity prices moved fell amid signs of slowing growth in China that could hamper demand for resources.
The Canadian dollar was down 0.63 of a cent to 100.64 cents US, backing off in pre-market trading after crossing the 101 cent threshold Monday.
Concerns about China's economy sent investors to the greenback.
On Tuesday, China raised the price of retail gasoline for the second time in two months.
Meanwhile, home prices dropped in 45 Chinese cities in February as the government moved to cool property speculation. And mining giant BHP Billiton said Tuesday it expects iron ore demand in China will flatten somewhat.
April oil prices shed 95 cents to US$107.14 a barrel, while gold prices lost US$21.90 to US$1,645.40 per ounce. Copper prices dropped nine cents to US$3.82.
A stronger U.S. dollar usually depresses commodity prices, which are denominated in the currency, as it makes them more expensive for holders of other currencies.
"China’s decision to raise fuel cost for the second time in six weeks, is weighing on markets as it could dampen economic growth. Accordingly, markets are shedding risk with equities lower, commodities weak, bond yields generally lower and a strong USD," Scotiabank said in its Daily Foreign Exchange Update.
Meanwhile, the U.S. Commerce Department said builders started work on slightly fewer homes in February, but they began preparing for what could be the healthiest spring buying season since the housing bubble burst. Builders broke ground on a seasonally adjusted annual rate of 698,000 homes last month. That's down 1.1 per cent from January.
