Canadian dollar closes higher amid surging oil prices, solid economic data

From Malcolm Morrison, The Canadian Press, March 31, 2011 – 4:18 p.m.

Canadian dollar closes higher amid surging oil prices, solid economic data

By Malcolm Morrison, The Canadian Press

Canadian dollars, also known as “loonies” are shown with U.S. dollars Tuesday, April 6, 2010 in Montreal. THE CANADIAN PRESS/Ryan Remiorz

TORONTO – The Canadian dollar closed higher against the American currency Thursday amid economic data showing solid economic growth in January and surging oil prices.

The loonie gained 0.19 of a cent to 103.14 cents US after Statistics Canada reported that gross domestic product grew by 0.5 per cent in January, meeting expectations and matching the pace of growth in December.

The agency said that growth was driven by the manufacturing sector and, to a lesser extent, by transportation and wholesale trade.

It added that the finance and insurance sector, construction and real estate also increased while mining and oil and gas extraction as well as retail trade decreased.

Oil prices climbed surged Thursday after control of a key oil port swung back to forces loyal to Libyan leader Moammar Gadhafi, dimming hopes of a quick rebel victory and a restart of crude exports.

The May crude contract on the New York Mercantile Exchange rose $2.45 to a 30-month high of US$106.72 a barrel.

The May copper contract on the Nymex was three cents higher at $4.32 a pound.

Gold prices advanced as the June bullion contract in New York gained $15 to a record close of US$1,439.90 an ounce.

The greenback was lower against the euro after data showed that inflation in the 17 eurozone countries spiked to the highest level in nearly two and a half years in March.

Eurostat, the EU’s statistics office, reported that consumer prices in the eurozone were 2.6 per cent higher in March than the year before, which is way above the central bank’s target of keeping inflation at “close to, but below two per cent.”

The inflation reading raised speculation that the European Central Bank will raise interest rates as early as its next meeting on April 7.

In the United States, there was good news a day before the release of the March non-farm payrolls report. The U.S. Labour Department said that the number of people seeking unemployment insurance benefits dipped by 6,000 to a seasonally adjusted 388,000 for the week that ended March 26. That’s the second decline in three weeks.

Economists expect the March employment report to show the economy created at least 185,000 jobs.




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