Loonie dips, Fed chair says too early to tell how weather has depressed economy

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TORONTO – The Canadian dollar closed lower Thursday as an important gauge of the country’s trade deficit increased less than expected during the fourth quarter.

The currency dipped 0.06 of a cent to 89.8 cents US as Statistics Canada reported that the current account deficit increased $1.2 billion to $16 billion in the fourth quarter.

The agency said the increase was mostly because of a larger deficit on trade in goods. However, the reading was less than the $16.8-billion deficit analysts had expected.

The current account is the sum of the balance of trade — exports of goods and services less imports — net income from abroad and net current transfers.

In the U.S., traders also took in remarks from U.S. Federal Reserve chair Janet Yellen that it’s too early to tell how badly adverse winter weather is affecting the American economy.

During a question and answer session before the Senate’s banking committee, Yellen noted that “a number of data releases have pointed to softer spending than many analysts had expected.”

“Part of that softness may reflect adverse weather conditions, but at this point it is difficult to discern how much,” Yellen said.

Meanwhile, the U.S. Commerce Department said orders for durable goods declined a seasonally adjusted one per cent in January compared with December. Much of last month’s decline was driven by a 20.2 per cent drop in demand for commercial aircraft, a volatile month-to-month category. But a key category that reflects business investment rose a solid 1.7 per cent.

Traders also looked ahead to other key data coming out over the next few days.

The latest economic growth figures for Canada and the U.S. will be released Friday morning.

Beyond that, traders awaited the upcoming interest rate announcement from the Bank of Canada next Wednesday and Canadian and U.S. jobs data being released at the end of next week.

Commodity prices were mixed with the April crude contract in New York off 19 cents to US$102.40 a barrel.

March copper was down one cent at US$3.20 a pound while April gold bullion gained $3.80 to US$1,331.80 an ounce.

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