TORONTO – The Canadian dollar lost ground to close lower against the U.S. greenback Wednesday as commodity prices fell and violent protests over austerity in Europe caused investor sentiment to turn negative.
The loonie fell 0.48 of a cent to 101.5 cents US as commodity prices failed to get a lasting boost from an improvement Tuesday in U.S. consumer confidence to its highest level since February.
In Canadian economic news, the Conference Board of Canada said consumer confidence showed improvement this month, following a weak showing in August. The Ottawa-based economic forecaster says its Index of Consumer Confidence increased 6.7 points to 82.2.
A report from Scotiabank currency analysts says with little domestic data available, the loonie is trading on broader global economic themes.
It noted the loonie has lost two per cent since the day after the U.S. Fed announced further stimulus measures as European and Asian concerns come to the forefront.
Investors were spooked by scenes of violent protests in Athens and Madrid that reignited concerns over Europe’s ability to implement the measures needed to deal with its debt.
The developments in Europe overshadowed moderately positive data on the state of the U.S. housing market.
The U.S. Commerce Department said sales of new homes in the United States dipped slightly in August from July, but the median price of homes sold during the month rose by a record amount.
New-home sales edged down to a seasonally adjusted annual rate of 373,000 in August, a dip of 0.3 per cent from July’s revised rate of 374,000. That had been the fastest pace since April 2010 when government tax credits were boosting sales.
The fear is that if there are continued worries about Europe being able to achieve a successful resolution to its debt crisis, that could worsen the recession across the Atlantic, lowering demand for commodities. The loonie’s performance is closely tied to that of commodities.
Meanwhile, the benchmark New York oil contract was $1.39 lower at $89.98 a barrel, the December gold contract slipped $12.80 to $1,753.60 an ounce and the December copper contract fell five cents to $3.71 a pound.