GB: Canadian dollar declines, commodities dip amid slower Chinese growth
TORONTO - The Canadian dollar declined alongside sliding commodity prices Friday amid data showing the Chinese economy continued to slow in the first quarter.
The currency lost 0.35 of a cent to 100.2 cents US as growth in the world’s second-biggest economy declined to 8.1 per cent in the three months ended in March.
That was down from the previous quarter’s 8.9 per cent and the weakest growth since the second quarter of 2009.
The World Bank and International Monetary Fund expect 8.2 per cent growth for China this year, lower than in the past but still far ahead of the low, single-digit forecasts for the United States, Canada, Japan and Europe.
Other data showed Chinese factory activity, retail sales and exports accelerating over the course of the first quarter, though still weaker than last year.
Commodity prices backed off in the wake of the Chinese growth data.
China has been a major contributor to the global recovery from the recession that followed the 2008 financial crisis. Its huge appetite for commodities has boosted prices for oil and metals.
Copper prices were down 11 cents to US$3.61 a pound. China is the world's biggest consumer of the metal, which is known as an economic barometer as it is used in so many industries. Demand worries have pushed the metal down almost eight per cent this month.
Weak Chinese growth also pushed oil prices lower with the May contract on the Nymex down 50 cents to US$103.14 a barrel.
Bullion prices also declined as the June contract lost $14.60 to US$1,666 an ounce.
Meanwhile, traders looked ahead to the next interest rate announcement by the Bank of Canada next Tuesday.
The bank is widely expected to leave its key rate at one per cent. But its accompanying statement will be scrutinized for clues as to when it might start raising rates.
Investors also worried about Europe’s debt problems. Yields rose for debt in both Italy and Spain, meaning they will have to pay more to borrow. Besides forcing those countries to spend more on interest payments, it’s also a sign that lenders continue to be nervous.
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