(The Canadian Press) TORONTO _ The Canadian dollar continued to weaken Monday but was off early lows as the latest reading on U.S. durable goods orders raised doubts about whether the U.S. Federal Reserve could start to relax its economic stimulus this year.
The loonie was down 0.12 of a cent at 95.11 cents US, adding to a slide of almost 1.5 US cents last week.
Traders think there is a good chance that the Fed will start cutting back on its US$85 billion of monthly bond purchases, a move that has kept long-term rates low and supported a strong rally on many stock markets this year.
But the Fed has been clear that it would only taper its asset purchases if economic conditions allow and on Monday traders took in a steep drop in durable goods orders.
The U.S. Commerce Department reported Monday that orders fell by a much greater than expected 7.3%. Economists had expected a drop of almost 4.0%. The showing followed a 3.9% rise in June thanks in part to strong airplane orders.
Data released Friday had showed a drop in new home sales, raising questions about the strength of the recovery in the U.S. housing market. That led to speculation that the Fed might stick with its current monetary stimulus or only reduce it very gradually.
Later in the week, traders will look to the latest growth figures from Canada and the U.S.
On Friday, Statistics Canada releases figures for gross domestic product growth in June and the second quarter.
Economists expect the data to show GDP contracted 0.5% during the month, in part because of severe flooding in Alberta and a construction sector strike in Quebec.
Stronger growth data is expected from the U.S. The second reading on second-quarter GDP growth comes out on Thursday and economists expect the data to show the economy advanced about 2.0% in the second quarter, up from the original reading of 1.7%.