(The Canadian Press) TORONTO – The Canadian dollar was lower Wednesday with no sign of a break in Washington's budget impasse, which has forced a partial shutdown of U.S. government operations and undermined confidence in the U.S. economy.
The loonie was down 0.2 of a cent to 96.65 cents US, adding to a 0.21 of a cent drop Tuesday as commodity prices were hit by worries about the shutdown and the Bank of Canada lowered its growth forecast for the rest of the year.
Market reaction to the partial government shutdown, which started Tuesday, has been relatively muted on hopes that it won't last too long.
But there is growing dismay that the standoff on Capitol Hill shows no signs of easing with some lawmakers in both parties suggesting the shutdown might last for weeks.
Adding to the grim mood is a deadline of Oct. 17 when the U.S. hits its debt limit and starts to run out of money to pay bills.
Meanwhile, there was an important sign that Italy's government would survive a confidence motion following a decision by former premier Silvio Berlusconi to back the administration. Berlusconi had earlier said his party wouldn't support premier Enrico Letta's ruling coalition.
That's a turnaround from last week when Berlusconi demanded his five Cabinet ministers in the government quit and bring it down, incensed at a vote planned Friday that could strip him of his Senate seat following his tax fraud conviction and four-year prison sentence.
And the European Central Bank kept its key interest rate at a record low 0.5%, holding off on more stimulus for the economy of the 17-member euro currency union as it monitors the tentative recovery.
Commodity prices were mixed with the November crude contract on the New York Mercantile Exchange up 14 cents to US$102.18 a barrel.
December copper was unchanged at US$3.27 a pound while December bullion gained $12.90 to US$1,299 an ounce.
On the economic front, payroll firm ADP reported that the U.S. private sector created 166,000 jobs last month, lower than the 178,000 that had been expected.
That's all the jobs data that traders will likely get this week as one of the spinoff effects of the government showdown is an absence of government data that usually moves markets. The Labor Department said Tuesday it wouldn’t be issuing its employment report for September on Friday.