Manufacturing dips, oil rises, loonie advances

Sales drop reflects lower production of aerospace products and parts.

TORONTO — The Canadian dollar closed higher Dec. 16 amid rising oil prices and a surprise move by Russia’s central bank to defend the ruble.

The loonie edged up 0.15 of a cent to 85.94 cents US as traders also digested data showing Canadian manufacturing sales declined 0.6% in October to $52.7 billion.

It was only the second decrease in 2014. The drop reflected lower production of aerospace products and parts and a decrease in primary metal sales.

The currency had dropped two-thirds of a US cent Dec. 15, squeezed by a greenback that strengthened ahead of the Dec. 17 rate announcement by the US Federal Reserve and falling prices for oil and metals.

The January crude contract in New York erased early losses to inch up two cents to US$55.93 a barrel following a drop of almost $2. Oil rose even as the HSBC manufacturing purchasing managers index for China slipped 0.5 points to a seven-month low of 49.5.

China’s growth fell to a five-year low of 7.3% last quarter.

Oil prices have collapsed since mid-summer, down about 50% amid a huge supply/demand imbalance.

Also focusing financial markets was a surprise move by Russia’s central bank, which hiked its key interest rate to 17% from 10.5% in a move to prop up the ruble, which has lost half of its value this year, in large part because of western sanctions and plunging oil prices.

It’s the biggest interest rate hike since 1998, a year when Russia defaulted on its sovereign bonds.

But the move was in vain as the ruble lost further ground against the greenback.

Elsewhere on commodity markets, February gold saw early gains evaporate and bullion fell $13.40 to US$1,194.30 an ounce. March copper dipped two cents to US$2.86 a pound.

© 2014 The Canadian Press

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