TORONTO – The Canadian dollar continued to drift downward Tuesday morning to multi-year lows amid mixed commodity prices and a heavy slate of economic data in Canada and the U.S. this week.
The loonie was down 0.23 of a cent to 93.75 cents US a day before the Bank of Canada’s next interest rate announcement. Markets generally aren’t looking to the central bank to move up rates until 2015.
The currency closed below 94 cents US on Monday for the first time since the end of August 2010. Tuesday’s intraday low as of midday was 93.69 cents US, which matched a level set on Aug. 31, 2010.
Traders looked to economic data coming out later in the week that could give a better idea of where the Federal Reserve is headed in cutting back on stimulus measures.
U.S. economic data this week, culminates with the release of the government’s employment report coming out on Friday.
A strong employment report would raise concerns that the Fed is set to start tapering its US$85 billion of monthly bond purchases that have kept U.S. interest rates low and persuaded many investors to seek higher returns in the stock market.
Economists forecast that the American economy cranked out about 175,000 jobs during November, down 5,000 from October.
Canadian employment numbers also come out on Friday with economists expecting about 7,500 jobs were created during the month.
Other key U.S. data out this week includes trade data for October, new home sales, a report on the latest reading on the health of the U.S. non-manufacturing sector and the latest reading of the U.S. economy from the Fed on Wednesday.
Another key Canadian report for the week is the merchandise trade balance report for October, which is being released on Wednesday. A steady run of trade deficits is one reason the loonie has tumbled more than seven cents US this year.
Other headwinds include weakening oil prices, a U.S. dollar that has risen alongside Fed speculation about tapering and a belief that the Bank of Canada won’t raise rates until at least 2015.
Oil prices were slightly higher in the wake of a stronger than expected reading on U.S. manufacturing Monday and ahead of a meeting of the Organization of Petroleum Exporting Countries in Vienna on Wednesday.
Analysts at JBC Energy in Vienna estimate that OPEC’s crude output fell to 29.44 million barrels a day in November, the lowest since May 2011 and the third straight month with output below 30 million.
The January crude contract on the New York Mercantile Exchange climbed $1.99 to US$95.81.
Metal prices were mixed with March copper down one cent to US$3.17 while February gold was up $2 to US$1,223.90.