TORONTO – The Canadian dollar was lower Wednesday as Chinese growth worries pressured commodity-sensitive currencies and oil prices.
The loonie was down 0.11 of a cent at 89.96 cents US.
The catalyst for the latest round of concerns about growth in the world’s second-biggest economy was data released on the weekend showing a drop of 18 per cent in Chinese exports in February.
Copper, viewed as an economic barometer as it is used in so many applications, has tumbled in recent days to the lowest level since mid-2010, having fallen 8.3 per cent over the previous three sessions. On Wednesday, the May copper contract on the New York Mercantile Exchange shed early losses and moved up a cent to US$2.96 a pound.
But demand concerns are only part of the problem for copper.
Chinese authorities gave the go-ahead late last week for the country’s first credit default, involving a manufacturer of solar panels. And another solar energy company is also in danger of default.
This is worrisome because copper is used as much for financing transactions as for its industrial applications. Traders worry that a wave of defaults could result in a massive liquidation of copper on the markets, which would further depress prices.
Oil prices have also headed steadily lower and the April contract in New York was down another $2.04 to US$97.99 after losing about $2.50 earlier in the week.
Worries about China, along with tensions in Ukraine, pushed bullion prices higher with the May contract ahead $23.80 to a six-month high of US$1,370.50 an ounce.
Traders have also kept an eye on simmering tensions between Russia and Ukraine.
The U.S. Senate has prepared legislation that would impose economic penalties on Russian officials complicit in Ukrainian corruption or anyone responsible for Moscow’s military takeover of Ukraine’s Crimean peninsula.