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Canadian dollar lower, commodities slid amid slew of negative economic news
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The Canadian Press-
The Canadian dollar fell about half a US cent Wednesday morning as grim economic data sent traders to the safe haven of U.S. Treasuries.
Sliding commodity prices also helped push the currency down 0.48 of a cent to 95.88 cents US.
There was disappointing news from China, which has been one of the few bright spots since the economic crisis of 2008 sent global economies into a slump.
A manufacturing survey from HSBC indicated that China's industrial sector is slowing. Its main manufacturing gauge fell to 48 in November from 51 in October — its sharpest drop since March 2009. Any reading below 50 indicates contraction from the previous month.
There was also further grim news from Europe, where a worsening government debt crisis has raised fears about the future of the euro itself and pushed the region to the brink of recession.
A closely watched survey from financial information company Markit indicated that eurozone economies contracted for the third month running in November.
Although its monthly composite purchasing managers index rose to 47.2 in November from 46.5, it remains below the 50 mark, the threshold between expansion and contraction.
Markit said Wednesday's survey suggested that the eurozone is contracting at a quarterly rate of 0.6 per cent in the fourth quarter and that the problems are increasingly spreading to Europe's two biggest economies, Germany and France.
Also, eurozone industrial orders collapsed by a massive 6.4 per cent in September from the previous month.
Analysts said the figures are likely to pile the pressure on the European Central Bank to cut interest rates again, possibly as soon as next month.
Adding to investor unease was an auction of German government bonds which technically failed Wednesday, deepening fears that the debt crisis has hit the core of the eurozone.
The sale of €6 billion of 10-year government bonds attracted bids totalling just €3.889 billion. The Bundesbank, which conducts auctions on behalf of the Germany’s federal debt agency, accepted €3.644 billion in bids.
That left the central bank to pick up the slack — 39 per cent of the total amount on offer.
Worries about lower demand and the higher U.S. dollar pushed oil prices down more than US$2 a barrel. A stronger greenback usually helps depress oil prices, which are denominated in dollars, as it makes oil more expensive for holders of other currencies.
The January contract for crude on the New York Mercantile Exchange lost $2.08 to US$95.93 a barrel.
Metals also sold off with the December copper contract on the Nymex down nine cents to US$3.24 a pound.
Bullion prices also retreated, with the December gold contract in New York off $12.50 at US$1,689.90 an ounce.
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