BUSINESS

Rising commodities, hopes for French credit rating boost Canadian dollar

01/10/2012 09:05 EST | Updated 03/11/2012 05:12 EDT
TORONTO - The Canadian dollar closed higher Tuesday as sentiment was boosted by the increasing likelihood that France will avoid a credit downgrade from at least one rating agency.

The loonie also found lift from rising prices for oil and metals, gaining 0.57 of a cent to 98.33 cents US.

There was relief after Fitch said that France was unlikely to lose its AAA credit rating this year.

Fitch's head of sovereign ratings David Riley also said the agency will give its verdict on several euro countries by the end of January. Fitch currently has Italy, Spain, Belgium, Ireland, Slovenia and Cyprus on so-called "ratings watch negative" and Riley said the reductions could be up to two notches.

There were also rumours that China would ease lending in the wake of data showing China's import growth decelerated sharply in December in a new sign the world's second-largest economy is slowing, in part because the government has tightened lending and investment curbs to prevent overheating.

The customs agency said December imports rose 11.8 per cent over a year ago, down from November's 22.1 per cent gain. Exports rose 13.4 per cent, down only marginally from the previous month's rate.

The country's politically sensitive global trade surplus widened to $16.5 billion.

Commodity prices advanced with the February crude contract on the New York Mercantile Exchange gained 93 cents to US$102.24 a barrel.

Copper prices were also higher as the March contract climbed 10 cents to US$3.51 a pound.

And February gold rose $23.40 to US$1,631.50 an ounce.

Traders also took in positive news from the Canadian housing sector. Canada Mortgage and Housing Corp. reported Tuesday that housing starts rose more than expected to more than 200,200 units last month — from 185,600 in November — with condos in Toronto and the Atlantic region leading the way.