Loonie extends its decline of last week as global economy shows signs of trouble

TORONTO – The Canadian dollar moved lower Monday, as growing concerns about the global economy weighed on currencies.

The loonie closed down 0.03 of a cent to 96.18, near a 5-1/2 month low.

It has lost more than five cents in a little over a month as nervous traders avoided risk and flocked to the U.S. Treasury and amid reduced expectations for a rate hike from Canada’s central bank.

The Bank of Canada is widely expected to leave its key rate unchanged at one per cent on Tuesday, and governor Mark Carney could also end up discouraging any thought of a rise in interest rates this year because of a slowing economy.

Finance Minister Jim Flaherty told reporters in Toronto he will discuss the worsening economic climate with his Group of Seven colleagues Tuesday morning.

Flaherty said he considers the global economic situation to be serious but added Canada’s relatively small federal debt and deficit give the federal government room to act if the need arises as it did in the 2008-09 downturn.

In commodities, the July crude contract on the New York Mercantile Exchange was up 75 cents to $83.98 U-S a barrel.

The July copper contract on the Nymex rose two cents to US$3.33 a pound.

Bullion prices for August were lower with the contract falling $8.20 to US$1,613.90 an ounce.