Central bank report on domestic business confidence lifts Canadian dollar

TORONTO – The Canadian dollar moved higher Monday after a report showed improved confidence in the domestic business community.

The loonie rose 0.07 of a cent to 101.65 cents US.

A new survey by the Bank of Canada suggests Canadian business executives are looking forward to better conditions in 2013 than last year. The central bank’s latest quarterly business outlook survey shows firms on balance think sales and employment will pick up after a tough 2012.

The outcome of the survey was somewhat more positive than expected, partly because it was compiled in mid-December as the U.S. was enveloped in concerns about the pending fiscal cliff. Economists had set the bar low under the assumption that uncertainty in the U.S. would influence the survey.

The survey is based on responses from senior management at 100 firms chosen as a representative sample of the overall economy.

“The text in the document maintains a cautious tone, suggesting there is a slight mismatch between movements in the various components and how businesses actually view the economy,” Ian Pollick, fixed income strategist at RBC Dominion Securities, said in a note.

“Crucially, many businesses are now focusing on investment spending as a means to use existing capital more intensively rather than spending plans related to major new products.”

Key commodities rose to their highest levels in several months. The February crude contract lifted 58 cents to $94.14 on the New York Mercantile Exchange, bringing oil to near a four-month high.

Gold prices ended the session at a three-month high, up $8.80 for the February contract at US$1,669.40 an ounce. March copper dipped two cents to $3.63 a pound.