BUSINESS

Loonie closes up: Federal Reserve, retail data reassure that recovery on track

03/13/2012 08:24 EDT | Updated 05/13/2012 05:12 EDT
TORONTO - The Canadian dollar closed higher Tuesday, supported by rising commodities amid further confidence that the U.S. economic recovery is on track.

The loonie gained 0.35 of a cent to 101.09 cents US as the U.S. Federal Reserve said strains in global financial markets have eased, household and business spending have continued to advance and labour conditions have continued to improve.

It also left its key interest rate near zero and said that it expects to keep rates exceptionally low through at least late 2014.

Traders had earlier taken in a solid retail sales report for last month that showed sales ran ahead 1.1 per cent.

It was the biggest gain since September and the data provided evidence that a stronger job market is boosting the American economy. Auto sales were strong and department stores had their biggest gain in more than a year.

Even without a 3.3 per cent rise in gasoline sales, retail sales would have increased a solid 0.8 per cent.

Positive economic data from Canada's biggest trading partner often provides lift to the loonie. That's because strong reports such as Tuesday's retail data raises hopes that demand will pick up for Canadian products such as commodities and manufactured goods.

The currency also found support from rising prices for oil and metals.

The April crude contract on the New York Mercantile Exchange gained 37 cents to US$106.71 a barrel.

May copper rose six cents to US$3.90 a pound. Bullion prices slipped $5.60 to US$1,694.20 an ounce.