Canadian Dollar And Business Outlook

By Commodity News Service Canada

WINNIPEG, December 20 ‑ The Canadian dollar was trading at a weaker level compared to its US counterpart at 8:53 CST Thursday.

The hedging of risk, just in case the US fiscal cliff isn’t avoided and tax hikes come into effect on January 1, was responsible for much of the loonie’s slide to the downside, analysts said.

At 8:53 CST Thursday, the Canadian dollar was at US$1.0106 or US$=C$0.9895, which compares with Wednesday’s North American close of US$1.0120 or US$=C$0.9881.

Declining commodity prices, including crude oil, gold and copper, also put downward pressure on the Canadian unit.

However, strong Canadian retail sales data limited the Canadian dollar’s downside potential. Retail sales in Canada were up 0.7%, to C$39.4 in October, according to Statistics Canada.

Positive gross domestic product data from the US also helped to underpin the Canadian dollar. Third quarter GDP in the US expended at an annual rate of 3.1% from July to September, beating pre-report expectations of a 2.8% expansion.

The TSX was down 18.42 points, or 0.15%, at 8:53 CST Thursday morning to sit at 12,385.21.