News Column

Canadian dollar up slightly amid strong trade data, geopolitical concerns

August 6, 2014

Malcolm Morrison, The Canadian Press



TORONTO - The Canadian dollar was higher Wednesday as a much better than expected trade report trumped geopolitical concerns.

The loonie was up 0.04 of a cent to 91.28 cents US as Statistics Canada reported that the country's trade surplus shot up to $1.9 billion in June from a revised $576 million in May.

The improvement came as exports rose 1.1 per cent in June, while imports declined 1.8 per cent.

Exports of energy products were up 2.5 per cent to $11.9 billion. Crude oil and crude bitumen increased 2.8 per cent to a record high of $8.9 billion, as prices rose 2.2 per cent.

Despite the small gain for the loonie, it was generally a risk off day on financial markets with geopolitical worries were front and centre after news reports of a buildup of Russian troops on the Ukraine border. On Tuesday, Polandís prime minister said he has information indicating that there is a growing threat of a "direct intervention" by Russia in Ukraine.

In addition, Russian president Vladimir Putin has told his government to prepare retaliatory measures against sanctions that have been levied by the U.S. and the EU for his country's support of Ukrainian rebels.

There was also glum data out of Europe.

Italy's gross domestic product contracted 0.2 per cent in the second quarter, which added to a negative showing in the first quarter, meaning the country is in technical recession.

And German industrial orders were 3.2 per cent lower than in May, when they also fell by 1.6 per cent.

The Federal Statistics Office said that geopolitical developments and risks were a likely cause for the decrease in new orders and that they expected only moderate development in the coming months.

Nervous investors bought into the U.S. currency and sent gold prices higher.

The yield on the benchmark U.S. 10-year Treasury was down to 2.46 per cent, down from 2.51 per cent late Tuesday.

December bullion was ahead $19.10 to US$1,304.40 an ounce.

September copper dropped five cents to US$3.16 a pound while September crude was ahead 13 cents to US$97.51 a barrel.


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Source: Canadian Press DataFile


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