TORONTO - The Canadian dollar closed lower Wednesday amid falling prices for oil and metals and a surprise announcement from the Swiss National Bank that it was cutting its main interest rate to halt a sharp rise in the franc.
The loonie lost 0.25 of a cent to 103.89 cents US as economic data from the U.S., Canada's largest trading partner, also weighed on the currency.
The Swiss National Bank lowered its target range for interest rates on lending between banks to zero to 0.25 per cent from zero to 0.75 per cent. Lowering interest rates can help reduce a currency's value against other currencies by lessening demand for investments and assets in that currency.
The bank also said it would "very significantly" increase liquidity into the Swiss franc money market and warned that the recent appreciation of the currency has dented the economy's prospects.
The Swiss franc has been heavily in demand in recent weeks through its status as a safe place for investors to park their cash. Investors have grown increasingly risk-averse amid concerns over government debt crises.
The U.S. debt debate and the risk of a default has accelerated in recent weeks that flight to safety. Investors looking for a safe haven continued to move gold further into record territory Wednesday with the December bullion contract up $21.80 to US$1,666.30 an ounce.
Meanwhile, crude oil prices headed lower for a fourth session with the September contract on the New York Mercantile Exchange down $1.86 at US$91.93 a barrel.
Demand expectations for crude have been ratcheted down after a run of grim U.S. economic data stoked fears that the world's largest economy is growing far slower than anticipated and may be heading back toward recession.
On Wednesday, investors took in data indicating that U.S. private sector job growth remained tepid in July.
The ADP employment report said that the sector created 114,000 jobs in July.
The data came out two days before the release of the U.S. government's non-farm payrolls report for July. Economists had believed the U.S. economy created about 90,000 jobs last month.
Investors were further unimpressed with data on the health of the U.S. service sector. The ISM's non-manufacturing index came in at 52.7, down from 53.3 in June and worse than the 53.8 reading that economists had expected.
Another report showed that U.S. factory orders for June fell 0.8 per cent, worse than the 0.5 per cent decline that was forecast.
