Canadian dollar lower, greenback strengthens on U.S. debt ceiling concerns
The loonie slipped 0.03 of a cent from Monday's close to 101.62 cents US. (file image)
By Malcolm Morrison, The Canadian Press
Published Tuesday, January 15, 2013 3:53PM CST
Last Updated Tuesday, January 15, 2013 3:57PM CST
TORONTO -- 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 101.62 cents US.
The American dollar strengthened amid growing concerns about a political standoff in Washington over the U.S. government's debt ceiling.
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 brinkmanship 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 US$93.28 a barrel.
March copper was unchanged at US$3.64 a pound while February bullion gained $14.50 to US$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 and --excluding Vancouver and Toronto -- the average price was up 3.3 per cent compared with a year ago.
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 eurozone 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 per cent in the fourth quarter.