TORONTO – The Canadian dollar closed slightly higher Wednesday at the end of a tough year amid general U.S. dollar weakness and falling commodity prices.
The loonie gained 0.05 of a cent to 86.2 cents US.
Commodity prices fell in the wake of data that suggested China’s economy is slowing.
HSBC’s survey of Chinese manufacturers found their activity contracted in December with its monthly purchasing managers’ index crossing the 50 threshold to fall to 49.6.
Markets were expecting that outcome since a preliminary version of the survey released earlier in the month also showed a contraction but the confirmation underpinned hopes for more government stimulus in China.
The February crude oil contract in New York dropped 85 cents to US$53.27 a barrel.
Prices failed to respond to data showing a sharper than expected drawdown of U.S. crude oil inventories last week. The Energy Information Administration says that inventories declined by 1.8 million barrels to 385.5 million barrels. Analysts expected a decline of 1.25 million barrels for the week.
Elsewhere on the commodity markets, March copper gave back three cents to US$2.83 a pound while February gold faded $16.30 to US$1,184.10 an ounce.
The Canadian dollar has tumbled 7.8 cents U.S. or 8.32 per cent this year.
The American dollar strengthened in 2014 as the Federal Reserve wrapped up its massive program of buying bonds and mortgage-backed securities that kept long-term interest rates low.
It is also expected that the Fed will move to hike rates for the first time since the 2008 financial crisis. Expectations are the Bank of Canada will also move to hike rates next year.
The loonie has also been pressured by oil prices which have tumbled more than 50 per cent since summertime highs amid a worldwide supply glut.