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The Canadian Press - ONLINE EDITION
Canadian dollar moves lower amid uncertainty over fiscal cliff talks
Loonies are shown in Calgary, Alta., July 19, 2012. THsE CANADIAN PRESS/Jeff McIntosh
TORONTO - The Canadian dollar closed lower Thursday with sentiment whipsawed on varying assessments on how negotiations are going in clinching a deal that would avert the so-called fiscal cliff.
That's the term used for the looming imposition of big spending cuts and tax hikes next year under U.S. law if politicians don't negotiate an alternative. The U.S. economy would likely fall back into recession if the fiscal cliff can't be avoided.
The loonie was down 0.09 of a cent at 100.73 cents US following a gain of about one-third of a U.S. cent on Wednesday.
House Speaker John Boehner expressed disappointment with the pace of talks with the White House to avoid going over the fiscal cliff.
Following a Thursday meeting with Treasury Secretary Tim Geithner, Boehner said Republicans have put concessions on the table, but president Barack Obama still has to outline the spending cuts he’s willing to make.
"We have a debt crisis, it’s the spending that is out of control,"Boehner told reporters following the meeting.
Shortly after, Senate Majority Leader Harry Reid chimed in, saying president Obama is still waiting for a serious offer from Republicans.
"We need Republicans to come forward with something," he said.
Every day seems to bring a new assessment of where negotiations stand. Traders were reassured Wednesday after Boehner said he was optimistic that a deal can be reached with Obama.
Meanwhile, traders also took in better-than-expected Canadian trade data and an upward revision of third-quarter U.S. economic growth.
Statistics Canada reported the country’s current account deficit increased $500 million to $18.9 billion in the third quarter. The agency said the deficit grew as exports declined at a faster pace than imports fell.
And the U.S. economy grew at an annual rate of 2.7 per cent in the third quarter, higher than the original reading of two per cent.
Commodity prices were also higher as January crude on the New York Mercantile Exchange rose $1.58 to US$88.07 a barrel.
March copper gained seven cents to US$3.61 while February bullion was ahead $10.70 to US$1,727.20 an ounce.
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