TORONTO – The Canadian dollar closed slightly lower Monday, a day ahead of the Bank of Canada’s next announcement on interest rates.
The currency was down of 0.13 of a cent to 100.03 cents US. The central bank is widely expected to keep its key rate at one per cent.
It was also another day for concern over the European debt crisis.
The yield on Spain’s 10-year government bonds jumped to 6.1 per cent on the secondary market, according to financial data provider FactSet.
Later on Monday, the yield dropped slightly to 6.02 per cent. It had closed at 5.93 per cent Friday after a week of persistent market tension.
The 10-year bond yield surged toward seven per cent late last year, a rate considered unsustainable for a country over a long period.
The latest rise reflected investor skepticism that Spain can deal with its huge debt as the country is expected to enter its second recession in three years this quarter.
Commodity prices initially improved following the release of data showing a much bigger than expected rise in U.S. retail sales in March. Sales ran up 0.8 per cent over the month, about double the amount that economists expected, after rising one per cent in February.
However, copper prices closed unchanged at US$3.63 a pound. Copper has lost about eight per cent so far this month amid data showing slowing growth in China, which is the world’s biggest consumer of the metal. Copper is known as an economic bellwether because it is used in so many industries.
Oil prices inched up a dime to US$102.93 a barrel while gold bullion fell $10.50 to US$1,649.70 ounce.
Traders also took in moves by China that reinforced the country’s pledge to have its yuan currency trade freely by 2015.
The People’s Bank of China announced that effective Monday it will double the size of the currency’s trading band with the U.S. dollar to one per cent from 0.5 per cent.
BMO Capital Markets senior economist Carl Campus said the move “was likely meant to deflect some criticism that China is not doing enough to reduce global trade imbalances.”