Canadian dollar weakens as data weighs on global outlook

Thu Sep 20, 2012 10:07am EDT
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar broke through this week's narrow trading range on Thursday, weakening against the U.S. currency after disappointing U.S. data, falling oil prices and weak Chinese and euro zone data heightened concerns about global economic growth.

The number of Americans filing new claims for jobless benefits held near two-month highs last week, suggesting some weakening in labor market conditions, while its manufacturing sector saw its weakest quarter in three years as foreign demand for U.S. goods continued to fade, an industry survey showed.

Overseas, the downturn in activity in the euro zone's service sector steepened this month at the fastest pace since July 2009.

"The weaker euro zone data has tempered risk appetite a little bit. As well, we saw weaker-than-expected U.S. jobless claims futures, which cast some doubt on the health of the U.S. recovery and the outlook for Canadian exports," said Sal Guatieri, senior economist at BMO Capital Markets.

Meanwhile, manufacturing in China contracted for an 11th month in a row in September, according to a private sector survey of factory managers that indicated the world's second largest economy remains on track for a seventh quarter of slowing growth.

The commodities-linked currency was also pressured by crude prices, which were hit by the slew of bearish news, as well as a pledge by Saudi Arabia to keep oil prices from rising too high.

At 9:25 a.m. EDT (1325 GMT), Canada's dollar stood at C$0.9803 to the U.S. dollar, or $1.0201, weaker than Wednesday's North American session finish of C$0.9745, or $1.0262.

The currency had been trading in a narrow range this week as markets digested the implications of new monetary policies in the United States, Europe and Japan aimed at stimulating growth.   Continued...