[TORONTO, ON] – The Canadian dollar closed lower Thursday as commodity prices pulled back and investors questioned whether eurozone leaders could make progress at an emergency meeting.
The loonie was down 0.69 of a cent at 96.82 cents US as traders flocked to less risky assets amid the EU uncertainty.
Traders are treading cautiously ahead of the two-day EU summit beginning Thursday.
''The currency markets are on the defensive again today on concerns over little solution to European problems coming forth from the meetings today and tomorrow,'' says Bob Tebbutt of Peregrine Financial Group Canada Inc.
European leaders are gathering to sign off on measures to boost growth on the Continent. Yet expectations of a breakthrough on the explosive issue of pooling European debt have fallen by the wayside.
Olli Rehn, European commissioner for economic affairs, told reporters he expected leaders would agree on new growth measures for Europe, as well as on action to reduce borrowing rates for Spain and Italy, which are approaching unmanageable levels.
''I expect that there will be a decision on a further step toward rebuilding the economic and monetary union,'' he said. ''We also need concrete decisions on a short-term stabilization of financial markets, especially sovereign debt markets.''
The August crude contract lost $2.52 to US$77.69 a barrel on the New York Mercantile Exchange.
Crude has fallen to near eight-month lows and down from US$106 a barrel less than two months ago amid signs that economic growth and oil demand are slowing in the U.S., Europe and China.
The August gold contract fell $28 to US$1,550.40 an ounce, while the July copper contract lost two cents to US$3.33 a pound.
U.S. government data released Thursday showed that the American economy grew only modestly in the first three months of the year. Consumer spending increased at a slower pace than previously estimated, while business investment was growing faster than previously thought.
The Commerce Department says the overall U.S. economy grew at an annual rate of 1.9 per cent in the January-March quarter. That was identical to the government's estimate a month ago, although the components were altered.
Meanwhile, the number of people seeking U.S. unemployment benefits fell last week, but the level of applications remains too high to signal a pickup in hiring.
The U.S. Labor Department said Thursday that weekly applications for benefits fell to a seasonally adjusted 386,000. That's down from 392,000 the previous week, which was revised upwards. The four-week average, which smooths week-to-week fluctuations, was mostly unchanged at 386,750.