Skip to main content

The Globe and Mail

Loonie lower as stronger greenback pressures oil, copper


Canada's commodity-sensitive dollar closed slightly lower Tuesday as a stronger U.S. greenback pressured prices for oil and copper.

The loonie slipped 0.03 of a cent from Monday's close to $1.0162 (U.S.).

The U.S. dollar strengthened amid growing concerns about a political standoff in Washington over the U.S. government's debt ceiling.

Story continues below advertisement

On Tuesday, Fitch Ratings warned that the United States could lose its top credit rating for the second time if there's a delay in raising the ceiling.

Congress has to increase the country's debt limit by March 1 or face a potential default. There are fears that the debate will descend into the sort of squabbling and political brinksmanship that marked the last effort to raise the ceiling in the summer of 2011.

The higher U.S. dollar helped send commodities lower because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals that are dollar-denominated.

February crude on the New York Mercantile Exchange closed down 86 cents to $93.28 a barrel.

March copper was unchanged at $3.64 a pound while February bullion gained $14.50 to $1,683.90 an ounce.

On the economic calendar, the Canadian Real Estate Association says the number of home sales fell 17.4 per cent last month compared with the previous December. They were also down 0.5 per cent compared with November.

However, the average price in December was up 1.6 per cent from a year ago at $352,800 (Canadian) and – excluding Vancouver and Toronto – the average price was up 3.3 per cent compared with a year ago.

Story continues below advertisement

In the U.S., the Commerce Department reported that December retail sales were up 0.5 per cent, better than the 0.2 per cent rise that economists had expected.

The strong retail showing was a relief to traders who worried that consumer spending would slow during the month amid a tense debate in Congress over tax increases and spending cut.

A 1.6 per cent jump in sales of autos and auto parts led all categories. Car companies closed out their best sales year since 2007.

Overseas, Germany's economy grew by a modest 0.7 per cent in 2012 as Europe's biggest economy slowed under the weight of the euro zone debt crisis.

No fourth-quarter figure was given for gross domestic product, but the full-year total underscored what economists have been suspecting for some time – that Germany turned in negative growth in the fourth quarter. Growth was 0.8 per cent in the first quarter, 0.3 per cent in the second and 0.2 per cent in the third.

Analyst Carsten Brzeski at ING said the numbers showed that the German economy shrank by three-tenths to four-tenths of a percentage point in the fourth quarter.

Story continues below advertisement

Report an error

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨