Canadian dollar falls half a cent as key commodity prices backtrack

TORONTO – The Canadian dollar lost more than half a cent Tuesday as prices for both crude oil and gold bullion lost ground.

The loonie backed off 0.51 of a cent to 87.77 cents US, giving back a large portion of the near full-cent gain it racked up the previous session.

Pulling the currency lower were weaker oil prices as the January crude contract dropped $2.12 to US$66.88 a barrel on the New York Mercantile Exchange.

Oil prices have plunged about 35 per cent from mid-summer highs because of a higher U.S. dollar, lower demand and most particularly, a glut of global supply.

Gold bullion edged down $18.70 to $1,199.40 an ounce for the February contract, while March copper slid 6.5 cents to US$2.89 a pound.

Several influential factors could drive the direction of the Canadian dollar later this week, including the Bank of Canada’s next interest rate announcement on Wednesday and U.S. jobs numbers on Friday.

“If commodities are the way they are, they’re probably going to keep the Canadian dollar hostage for some time,” said Sid Mokhtari, a market technician at CIBC World Markets.

“Especially if employment data out of the U.S. comes in as stronger,” he added.

Canada’s central bank is universally expected to leave its key rate unchanged at one per cent, where it’s been for more than four years.

The Bank of England and European Central Bank make their rate announcements on Thursday.