Canadian dollar falls amid Chinese economic worries, positive U.S. data

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TORONTO - The Canadian dollar was lower Friday as investors looked to China to see if it will make any moves to address its economic slowdown.

The loonie fell 0.09 of a cent to 90.56 cents US.

Markets have been antsy, awaiting an indication of whether the world's second-largest economy will pump more stimulus into its economy, as growth in China has slowed to its weakest point since the financial crisis.

China has set a target of 7.5 per cent economic growth this year but is more concerned with creating new jobs than precisely meeting the GDP figure.

A preliminary reading of China's manufacturing, released Monday, showed activity at an eight-month low in March.

Meanwhile, there was more evidence to show that the U.S. economy is gaining strength at a moderate pace.

Americans spent slightly more in February but the increase, although modest, may have held back by severe winter weather.

The Commerce Department says consumer spending rose 0.3 per cent in February following a 0.2 per cent rise in January. The spending increases would have been weaker except for a surge in spending on utility bills.

In February, spending on durable goods such as autos dropped as consumers stayed away from auto dealerships.

Income increased 0.3 per cent in February, the same amount as January.

Analysts say consumer spending, which accounts for 70 per cent of economic activity, slowed significantly in the current quarter and will depress overall economic growth. But they are looking for a rebound in the second quarter.

On Thursday, the Commerce Department reported that the U.S. economy grew at a 2.6 per cent annual rate from October to December, slightly more than previously estimated, as consumer spending rose at the fastest pace in three years. Analysts had been expecting a growth rate of 2.4 per cent.

The release coincided with figures from the U.S. Labor Department that found jobless claims fell 10,000 last week to a seasonally adjusted 311,000, the lowest since late November and a hopeful sign that hiring could pick up.

Yet despite that encouraging data, however, the number of Americans who signed contracts to buy homes fell for the eighth straight month in February.

Commodities were higher as May crude on the New York Mercantile Exchange climbed 57 cents to hover near US$101.85 at US$99.75 a barrel.

June bullion fell $4 to US$1,290.80 an ounce while May copper gained five cents to US$3.04 a pound.

Organizations: Commerce Department, U.S. Labor Department, New York Mercantile Exchange

Geographic location: U.S., China, TORONTO

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