Loonie lower amid manufacturing sales slide, G20 meeting on currency tensions
Toronto - The Canadian dollar closed lower Friday as G20 finance ministers met to discuss tensions over currencies and data showed that Canadian manufacturing sales posted the largest decline in nearly four years in December.
Toronto – The Canadian dollar closed lower Friday as G20 finance ministers met to discuss tensions over currencies and data showed that Canadian manufacturing sales posted the largest decline in nearly four years in December.
The loonie fell 0.49 of a cent to 99.39 cents US as Statistics Canada reported that sales fell 3.1% to $48 billion, led by lower sales in the transportation equipment sector.
That was much larger than the 0.8% slide that economists had expected and the largest pullback since May 2009.
Statistics Canada said that manufacturing sales fell 9.1% in the transportation equipment industry to $7.8 billion. This in turn was led by a 15.4% fall in the motor vehicle assembly industry.
Meanwhile, the G20 meeting in Moscow takes place amid speculation about a “currency war,” where countries competitively devalue their currencies to gain a competitive edge.
The Japanese yen has been the currency primarily in focus this week.
Japan, the world’s third-largest economy, faces allegations that it is trying to lower the value of the yen to stimulate its economy and get a competitive edge on exports.
The yen fell to a 21-month low against the US dollar this week and a near three-year trough against the euro. As the yen falls, Japan’s exports become cheaper and those of other countries, which are also trying to pull out of the economic malaise that followed the 2008 financial collapse, become relatively more expensive.
Earlier this week, the volatility in the currency markets prompted the Group of Seven leading industrial nations, which include the US, Germany, Britain, France, Italy and Canada, as well as Japan, to warn that volatile movements in exchange rates could adversely hit the global economy and to reaffirm their commitment to market-driven exchange rates.
On Friday, the yen strengthened ahead of the G20 meeting with analysts expecting pressure to be exerted on Japan’s finance minister and central banker to at least commit to not allow the yen to fall much more.
The March crude contract on the New York Mercantile Exchange lost $1.45 to US$95.86 a barrel.
April gold on the Nymex lost $26 to US$1,609.50 an ounce while March copper in New York was unchanged at US$3.74 a pound.