Loonie closes higher, oil stages late day comeback ahead of Chinese growth data

TORONTO – The Canadian dollar closed slightly higher Thursday amid worries about a slowing global economic recovery and a late-day gain in oil prices.

The commodity sensitive currency was up 0.12 of a cent to 98.17 cents US, reversing early losses as oil prices recovered from session lows.

The August crude contract on the New York Mercantile Exchange gained 27 cents to US$86.08 a barrel after going as low as $84.21.

Crude moved up as the Obama administration said it is hitting Iran with more financial sanctions designed to hinder the country’s nuclear and ballistic missile programs.

Crude has plummeted from US$106 in May amid expectations that a global slowdown led by Europe, the U.S. and China will undermine demand.

Copper prices lost ground as traders braced for more data from China showing the world’s second-largest economy slowing faster than thought.

Copper prices slipped three cents to US$3.41 a pound while gold gave back $10.40 to US$1,565.30 an ounce.

Data are expected to show Chinese growth in the three months ending in June fell as low as 7.3 per cent, down from the previous quarter’s nearly three-year low of 8.1 per cent. That is in line with this year’s official 7.5 per cent target, but revenues for companies in construction, shipbuilding and export manufacturing are down by up to half compared with a year ago.

The slowdown is a setback for economies around the world that were looking to China to drive demand for exports and support global growth.

The U.S. Federal Reserve also provided disappointment.

There had been hopes Wednesday that the minutes of the most recent Federal Reserve meeting would indicate the Fed may engage in a third round of securities purchases aimed at increasing the supply of money in the economy, so-called quantitative easing.

The minutes showed members might be open to more stimulus but only after additional signs that the U.S. recovery is losing momentum.

Market watchers concluded that meant no likely action at the Fed’s next meeting July 31 to Aug. 1.