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Canadian dollar moves lower as September economic growth flattens

TORONTO – The Canadian dollar was lower Friday amid data showing economic growth stalled in Canada during September.

The loonie dropped 0.06 of a cent to 100.67 cents US as Statistics Canada reported there was no growth in gross domestic product during September following a 0.1 per cent dip during August.

That translated into third quarter economic growth of 0.6 per cent on an annualized basis, versus expectations of 0.8 per cent growth.

The agency said the disappointing performance reflected exports which fell two per cent in the third quarter, the largest decline since the second quarter of 2009.

Elsewhere on the economic front, Americans cut back on spending last month and saw no growth in their income, reflecting disruptions from Superstorm Sandy.

The U.S. Commerce Department says consumer spending dropped 0.2 per cent in October, down from an increase of 0.8 per cent in September and the weakest showing since May. Income was flat in the month following a 0.4 per cent rise in September.

Another report shows the eurozone’s unemployment rate is at a record high.

Eurostat, the EU’s statistics office, says the recession in the eurozone pushed unemployment in the currency bloc up to 11.7 per cent in October.

The rise from the previous record of 11.6 per cent in September was anticipated in light of the eurozone’s return to recession in the third quarter. That is commonly defined as two consecutive quarters of negative growth.

Traders also looked for further word on how negotiations are progressing in heading off a fiscal cliff at the end of the year. That’s the term given to the situation that would arise from the automatic imposition of steep spending cuts and significant tax increases.

Economists believe that those cuts and increases would take a big bite out of economic growth and likely send the U.S. economy back into recession.

Treasury Secretary Timothy Geithner presented a proposal to congressional leaders Thursday calling for US$1.6 trillion in higher taxes over 10 years. The proposal includes plans for legislation in 2013 aimed at saving $400 billion over 10 years from Medicare and other benefit programs.

Another feature in the Geithner plan is a call for increasing the U.S. debt limit without the need for congressional approval.

Commodity prices were mixed with the January crude contract on the New York Mercantile Exchange ahead 20 cents to US$88.27 a barrel.

February bullion was off $15 to US$1,714.50 while March copper was up two cents at US$3.61 a pound.