Canadian Press 2014-10-08 Malcolm Morrison

TORONTO — The Canadian dollar was lower Wednesday as the commodity-sensitive currency felt the weight of lower prices for oil, which hit fresh 18-month lows amid lower growth forecasts and lower demand.

The loonie dipped 0.15 of a cent to 89.37 cents US as commodities fell in the wake of a double-dose of weak German industrial data released Tuesday that raised concerns that Europe’s biggest economy may not rebound as expected in the third quarter.

Also, the International Monetary Fund trimmed its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe.

Those concerns translated into questions about demand for crude, particularly after data showed rising American inventories. The U.S. Energy Information Agency said Wednesday that U.S. oil inventories rose by 5.1 million barrels last week.

Analysts had expected supplies to rise by 2.1 million barrels and the November crude contract in New York fell $1.35 to US$87.50 a barrel after closing Tuesday at its lowest level since April 2013.

Elsewhere on commodity markets, December copper lost four cents at US$3 a pound and December gold dropped $4.70 to US$1,207.70 an ounce.

Traders also digested data showed housing starts increased modestly during September.

Canada Mortgage and Housing Corp. reported that starts came in at an annualized pace of 197,343 units, up from 196,283 in August, due to an increase in multi-unit homes including condominiums.

Bob Dugan, CMHC’s chief economist, said that the currently elevated level of condominium units under construction supports our view that condominium starts should trend lower over the coming months.

On Friday, Statistics Canada releases the jobs report for September. Economists expect that the economy cranked out about 15,000 jobs.

Meanwhile, markets also looked to the mid-afternoon release of the minutes of the latest Federal Reserve meeting for hints about the timing of the central bank’s next interest rate hike. Many analysts expect the Fed to move mid-2015 but a steady stream of positive U.S. data has persuaded some that it could hike even earlier. Adding to uncertainty about Fed intentions is economic weakness in many areas outside of the U.S.

Fed speculation has helped drive the U.S. dollar sharply higher in recent weeks. But the greenback has also strengthened as the euro currency has fallen about 10 per cent against the U.S. dollar since mid-summer. It has weakened against a backdrop of practically non-existent inflation, weak economic data and a vow from the European Central Bank to take action to get the eurozone out of a deep funk, including driving interest rates to near zero.