Canadian dollar declines amid fiscal cliff worries, mixed commodities
The loonie has lost about one U.S. cent over the past week after the results of the U.S. election essentially left the political landscape unchanged. (file image)
By Malcolm Morrison, The Canadian Press
Published Wednesday, November 14, 2012 11:00AM CST
TORONTO -- The Canadian dollar extended a string of losses late morning Wednesday as worries about the knock-on effects of the U.S. economy falling off the so-called fiscal cliff continued to focus traders.
The currency was down 0.07 of a cent at 99.74 cents U.S.
The loonie has lost about one U.S. cent over the past week after the results of the U.S. election essentially left the political landscape unchanged. And that heightened pessimism that lawmakers will be able to come together and arrange a compromise to avoid the cliff at the start of the year.
That's when a series of tax cuts from the Bush era expire, which would raise tax bills for almost all Americans. As well, huge spending cuts are automatically set to take effect, which would take a huge chunk out of U.S. gross domestic product and likely push the economy back into recession, taking other countries' economies with it.
Such a scenario is bad news for a resource-based currency like Canada's as slowing economies will slash demand for oil and metals.
Commodity prices were mixed with December crude on the New York Mercantile Exchange ahead 55 cents at US$85.93 a barrel.
December copper was off a cent at US$3.46 a pound while December bullion gained $3.60 to US$1,728.40 an ounce.
It's a light day on the economic calendar with no releases from Canada.
In the U.S., retail sales for October fell 0.3 per cent as auto sales declined. Economists had expected a 0.2 per cent decline but superstorm Sandy was possibly a factor in the reading.
Traders also took in remarks from Fed vice-chairman Janet Yellen, who said Tuesday the central bank should tie interest rate hikes to specific unemployment and inflation levels. The Fed has already committed to keeping rates near zero until mid-2015.