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Loonie hovers as Stats Can industrial products price index dips

Canadian Press, The Canadian Press
0 Comments| June 27, 2014

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TORONTO _ The Canadian dollar was flat Friday morning, while an index measuring price changes for major commodities sold by manufacturers in Canada dipped last month.

The loonie was unchanged at 93.52 cents US.

Statistics Canada's Industrial Product Price Index was down 0.5 per cent in May, mainly because of lower prices for energy and petroleum products.

Diesel fuel, light fuel oils and gasoline were the main reasons for the decline in this commodity group.

Elsewhere on the economic calendar, traders looked for the University of Michigan's widely watched consumer sentiment index to rise to 81.9 from a flash estimate of 81.2.

That could help reassure investors rattled during this week by a much greater than expected U.S. gross domestic product contraction of 2.9 per cent, almost a full point higher than expected. Markets had initially shrugged off the data on expectations the American economy would jump ahead in the second quarter as the deterioration was largely blamed on severe winter weather. But economic concerns surfaced Thursday as data showed a worse than expected reading on consumer spending and consumption.

The report also sparked concerns about whether the economy can take the strain of higher interest rates, particularly after St. Louis Federal Reserve president James Bullard said markets don't realize how close the central bank is to reaching its targets of low unemployment and stable prices. That prompted speculation the Fed could hike as soon as the first quarter of 2015.

Traders are looking ahead to key economic data next week for reassurance that the economy is indeed on track for a strong second quarter, including the June reading on the manufacturing sector from the Institute for Supply Management and the release Thursday of the U.S. government's employment report for June.

Commodity prices were mixed with August crude lost 29 cents to US$105.55 a barrel. Crude prices have declined this week in the wake of the weaker than expected U.S. consumer data and expectations that the sectarian fighting in Iraq won`t spread to the oil-producing south.

September copper was unchanged at US$3.17 a pound while August bullion rose $1.40 to US$1,318.40 an ounce.

The loonie has had a positive month, up about 1 1/3 of a cent to a six-month high as gold and oil prices rose amid geopolitical concerns centred on a rising insurgency in Iraq and tensions between Ukraine and Russia.

The loonie had also found support from stronger than expected inflation data, which raised expectations that the Bank of Canada could raise interest rates sooner than thought.


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