TORONTO – The Canadian dollar closed higher Tuesday amid general U.S. dollar weakness and higher prices for oil and gold.
The loonie rose 0.32 of a cent to 87.41 cents US.
The currency slid almost four-tenths of a cent Monday to a five-year low as oil tumbled almost US$3 a barrel.
Crude was pressured by weak trade data from China that further depressed demand prospects and a report from Morgan Stanley that suggested prices for Brent crude, an international benchmark, could fall to as low as US$43 a barrel next year.
On Tuesday, the January crude contract in New York gained 77 cents to US$63.82 a barrel.
Oil prices have fallen a long way since averaging around US$105 a barrel at mid-summer. At the time, prices were elevated by geopolitical worries and a more optimistic take on the global economy.
But crude has slid since then as those as geopolitical concerns faded and the economic mood darkened. Markets are now trying to work out a huge imbalance in supply and demand, made even more troublesome by the decision by the OPEC oil cartel to leave production levels unchanged.
Falling prices have helped drive the loonie lower as investors worry about the negative spinoff effects of lower crude on the Canadian economy, including bank lending and house prices.
Elsewhere, a weaker greenback helped push February gold up $37.10 to US$1,232 an ounce. Investors are also seeking a safe haven while dumping equities because of pessimism about the global economy and increased speculation that last week’s strong U.S. jobs data could help persuade the Federal Reserve to hike interest rates next year sooner than expected.
March copper gained four cents to US$2.93 a pound.
