TORONTO – The Canadian dollar declined Tuesday morning as traders opted for safety amid worries that the U.S. could intervene militarily in the Syrian conflict.
The loonie fell 0.23 of a cent to 94.97 cents US a day after U.S. Secretary of State John Kerry claimed it was “undeniable” that the Syrian government had used chemical weapons in its conflict with rebel forces. The prospect of U.S.-led military action against the Assad regime was enough for investors to cut their exposure to risky assets.
The price of oil rose well above US$108 a barrel Tuesday on the latest round of worry centred on the Middle East. The October crude contract on the New York Mercantile Exchange ran ahead $2.26 to US$108.18 a barrel as traders assessed the potential for international intervention in Syria.
The price of oil has risen about 15 per cent in the last three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially in Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes.
Geopolitical worries boosted gold prices with the December contract on the Nymex running ahead $27.30 to US$1,420.40 an ounce.
Copper also advanced and the September contract in New York was up five cents to US$3.37 a pound.
On the economic calendar, traders looked to the latest reading on U.S. consumer confidence. The U.S. Conference Board was expected to report a slight dip in its August index to 79.3 from 80.3 in July.
If the data disappoints, then traders may rein in their expectations that the U.S. Federal Reserve will start to reduce its monetary stimulus next month.
At present, the Fed is buying $85 billion of financial assets a month in order to lower long-term interest rates and shore up the U.S. economic recovery. Up until recently, a run of data, particularly related to the labour market, had ratcheted up expectations that the so-called tapering would begin in September.
© The Canadian Press, 2013