News Column

Loonie down: traders await rate announcement, look to strong manufacturing data

June 2, 2014

Malcolm Morrison, The Canadian Press



TORONTO - The Canadian dollar was lower Monday as traders digested reports showing greater expansion in the Chinese and American manufacturing sectors.

The loonie dropped 0.46 of a cent to 91.77 cents US two days before the Bank of Canada delivers its next announcement on interest rates. The key rate is expected to stay unchanged at one per cent, where it's been since September 2010.

Economists will look to see if the central bank continues to flag concerns about low inflation being the No.1 concern since inflation has been heading higher recently.

Canada's annual inflation rate climbed to its highest level in two years, reaching two per cent in April, largely driven by an unusually big jump in energy prices.

On Sunday, the China Federation of Logistics and Purchasing said that its monthly manufacturing index rose to 50.8 points in May, up from Aprilís reading of 50.4 and was the highest level this year. Any reading above 50 indicates expansion.

And in the U.S., the Institute for Supply Management's index registered 56, in line with the 55.8 reading that economists had forecast.

The American report raised hopes for a strong economic rebound in the second quarter.

Hopes have been particularly high for a rebound after data released last week showed that the U.S. economy contracted by a larger than expected one per cent in the January-March period, due in large part to severe winter weather.

Meanwhile, copper prices got a lift from strong Chinese manufacturing data.

The July copper contract was up four cents to US$3.17 a pound.

Elsewhere on the commodity markets, July crude in New York fell 27 cents to US$102.44 a barrel.

July bullion headed 30 cents lower to US$1,245.70 after losing 3.5 per cent last week with markets feeling more comfortable about the Ukraine crisis and more concerned about deflation rather than inflation, particularly in Europe.

It is widely expected that European Central Bank president Mario Draghi will announce measures on Thursday aimed at raising inflation from very low levels and encouraging a lacklustre economic recovery.

Traders also looked ahead to other key domestic data coming out this week.

Canadian job figures for May come out Friday and economists expect about 21,000 jobs were created after the economy shed 29,000 the previous month.

Statistics Canada will also release the merchandise trade balance for April on Wednesday. Economists expect it to show a $100 million surplus.

In the U.S., economists also forecast another month of strong job gains. They expect the U.S. government's non-farm payrolls report coming out Friday will show that the American economy cranked out about 219,000 jobs following a much stronger expected 288,000 gain in April.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Canadian Press DataFile


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters