American manufacturing data for March drives loonie lower

The U.S. Institute for Supply Management's manufacturing index for March is expected to remain flat at an 18-month high of 54.2. Any reading above 50 indicates expansion.

TORONTO -- The Canadian dollar was lower Monday morning amid mixed commodity prices and ahead of the latest reading on the American manufacturing sector.

The loonie was down 0.14 of a cent to 98.29 cents US as traders also took in positive data from China's manufacturing sector.

The U.S. Institute for Supply Management's manufacturing index for March is expected to remain flat at an 18-month high of 54.2. Any reading above 50 indicates expansion.

Meanwhile, the China Federation of Logistics and Purchasing said Monday that the country's manufacturing picked up in March in a potentially positive sign for the world's second-largest economy.

Its Purchasing Managers' Index rose to 50.9 in March from 50.1 in February, which was the lowest reading in five months.

Chinese manufacturing is closely watched as an indicator of global consumer sales and demand for commodities such as copper and oil. High demand in the past has fuelled higher share prices for energy and mining stocks on the resource-intensive TSX.

However, despite the improvement in factory output, analysts said investors remained worried about a possible property bubble, inflation and what policies the new Chinese government might have in store.

On the commodity markets, the May crude contract on the New York Mercantile Exchange fell 62 cents to US$96.61 a barrel.

May copper slipped four cents to US$3.36 a pound while June gold bullion gained $3.80 to US$1,599.50 an ounce.

Russia's first deputy prime minister, Igor Shuvalov, says his government won't protect Russian depositors who are losing money in Cyprus but may offer assistance to some Russian state companies.

Big depositors at Cyprus' largest bank, including some Russians, may be forced to accept losses of up to 60 per cent, far more than initially estimated under the European rescue package to save the country from bankruptcy.

Traders also looked ahead to March employment data coming out on Friday.

In the U.S., economists expect job gains totalled about 190,000 in March after the American economy cranked out 236,000 jobs in February, with the unemployment rate staying unchanged at 7.7 per cent.

In Canada, Statistics Canada was expected to report that about 10,000 jobs were created in March. However, CIBC said in a note that it expects only about 5,000 new positions following a blowout performance in February when 50,700 jobs were created.