Loonie lower ahead of Federal Reserve meeting, Canadian/U.S. growth reports

TORONTO – The Canadian dollar closed lower Monday at the start of a busy week for key economic data.

The currency was off 0.04 of a cent at 88.98 cents US.

The major economic event of the week comes Wednesday when the U.S. Federal Reserve will make its next announcement on interest rates and provide some clarity on the end of quantitative easing, the stimulus program of massive bond buying that has kept long-term rates low and encouraged a rally on stock markets.

Later in the week, traders will find out how the Canadian economy fared in August. Statistics Canada was expected to report that gross domestic product for the month came in flat.

The latest indication of American economic strength also comes out this week. Markets are looking for data to show that gross domestic product in the third quarter grew at an annualized rate of three per cent.

Meanwhile, markets on Monday absorbed another dose of glum data from Germany, Europe’s biggest economy as business confidence dropped for a sixth consecutive month. The Ifo institute’s confidence index dropped to 103.2 points in October from 104.7 in September.

Other data showed that 13 of Europe’s 130 biggest banks failed an in-depth review of their finances and need an extra 10 billion euros to cushion themselves against any future crises. The European Central Bank’s landmark review showed most of Europe’s banks will be purged of bad investments and ready to lend to businesses when the economy finally picks up.

December oil in New York slipped a penny to US$81 after going as low as $79.44 a barrel after Goldman Sachs said that it expects oil prices to tumble into the next year as shale gas production continues to expand and oil supply outstrips demand.

December copper gained two cents to US$3.06 a pound while December gold faded $2.50 to US$1,229.30 an ounce.