TORONTO – The Canadian dollar was higher Monday as a strong Chinese economic report lifted metal prices and traders hoped for an agreement that would head off automatic tax hikes and spending cuts that could push the U.S. back into recession.
The commodity-sensitive currency rose 0.08 of a cent to 100.43 cents US.
Copper prices rose as the HSBC China manufacturing Purchasing Managers’ Index rose to a final reading of 51.5, the best reading for the data since May, 2011. The reading was an upward revision from the preliminary 50.9 result and an improvement from November’s PMI of 50.5.
The March contract was up three cents to US$3.62 a pound. China is the world’s biggest consumer of copper, which is viewed as an economic barometer as it is used in so many applications.
However, oil prices slipped with the February contract on the New York Mercantile Exchange down 40 cents to US$90.40 a barrel.
Bullion prices also improved with the March contract ahead $8.90 to US$1,664.80 an ounce.
Attention was also focused on Washington and attempts to prevent the U.S. from going over the so-called fiscal cliff at the beginning of the new year.
Traders were inclined to think that Republicans and Democrats would arrive at a compromise on cutting spending and raising taxes for top income earners by the end of this year.
Investors remain confident that some sort of deal will be reached, if not Monday then in the coming days or weeks. As a result, they think that the potential damage caused by higher taxes and spending cuts will be limited.
