TORONTO – The Canadian dollar closed Thursday at its lowest level since early July as the American currency strengthened amid data that showed stronger than expected economic growth in the second quarter.
The loonie was down 0.41 of a cent to 94.96 cents US, its first close below 95 cents since July 8.
U.S. gross domestic product grew at an annualized rate of 2.5 per cent, better than the 2.2 per cent that economists expected. The original reading was 1.7 per cent.
Traders also looked ahead to Canadian economic growth figures for the second quarter which come out on Friday.
On Thursday, Statistics Canada said the country’s current account deficit increased $1.1 billion to $14.6 billion in the second quarter on a seasonally adjusted basis. It says the change was largely reflected in the trade balance, led by a higher deficit on trade in goods.
The deficit on trade in goods expanded $1.1 billion in the second quarter to $3.1 billion, as imports increased.
Meanwhile, commodity prices backed off as concerns about intervention in Syria’s civil war faded somewhat. Late Wednesday, the UN Security Council’s permanent members failed to agree to a proposal to use force against Syria.
U.S. President Barack Obama also gave the impression that he had not yet decided to back a military strike. The U.K. government also backed down on a parliamentary vote to authorize British participation in any strike against Syria until UN inspectors reveal their findings on the apparent chemical attack in the suburbs of Damascus that has been blamed on the government of President Bashar Assad. The report is expected within a week.
The prospect of intervention in the country’s civil war has rattled markets this week as it raised fears that such a move could seriously affect a fragile global economic recovery and that fighting could spread to other areas of the Mideast.
Oil prices declined after running up about $4 in the previous two sessions on supply disruption concerns. The October contract on the New York Mercantile Exchange fell $1.30 to US$108.80 a barrel. Crude also felt the effect of data released Wednesday showing a sharp run-up in inventories last week.
Other commodities were lower as gold prices also started to back off following gains earlier in the week. The December bullion contract lost $5.90 to US$1,412.90 an ounce.
December copper slipped five cents to US$3.26 a pound.