Loonie continues slide on weak August manufacturing data
Statistics Canada says the August loss was mainly due to lower sales of motor vehicles and motor vehicle parts
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TORONTO—The Canadian dollar was lower Oct. 16 as traders continued to avoid riskier assets, instead opting to buy into the American dollar.
Traders also took in data showing a steep slide in manufacturing shipments during August.
The loonie fell 0.63 of a cent to US88.2 cents as Statistics Canada reported that shipments fell 3.3 per cent to $52.1 billion, the first decline of 2014. The agency says the August loss was mainly due to lower sales of motor vehicles and motor vehicle parts. Economists had expected a drop of 1.6 per cent, according to Thomson Reuters.
Canada’s manufacturing sector contracted for the first time this year as August sales fell 3.3 per cent to $52.1 billion. Sales for the month were down in 16 of 21 industries, representing about 81 per cent of the country’s manufacturing, Statistics Canada said.
Markets have been volatile and commodity-based currencies such as the loonie have sustained losses amid worries about a faltering global economy.
Statistics Canada said total inventories fell 0.6 per cent to $71.3 billion in August. It was the second time total inventories have fallen in eight months.
“Disinflationary pressures warn of more slack in the global economic outlook than expected, complicated by Ebola and geopolitical risks,” observed Camilla Sutton, chief FX strategist and managing director at Scotiabank Global Banking and Markets.
“Soft U.S. data yesterday, including disappointing retail sales… served to fuel fears.”
The flight to safety was reflected in sharply lower bond yields. The benchmark 10-year U.S. Treasury yield dropped 12 basis points to 2.01 per cent.
The commodity-sensitive currency is also feeling the weight of falling prices for metals and particularly crude oil, which fell below the key US$80 a barrel level as supplies increase and a faltering global economy dampened demand prospects. Prices were off the morning lows and November crude lost $1.37 to US$80.41 a barrel.
Meanwhile, other commodities were lower October 16 as December bullion faded $4.70 to US$1,240.10 an ounce while December copper lost four cents to US$2.97 a pound.