06/14/2011 04:52 EDT | Updated 08/14/2011 05:12 EDT

Canadian Dollar Gains Sharply On Greenback Amid Oil Price Rise And Fresh U.S. Retail Data


THE CANADIAN PRESS -- TORONTO - The Canadian dollar closed up sharply against the American currency Tuesday amid some positive economic news from Canada's largest trading partner and rising oil prices.

The loonie climbed 0.83 of a cent to 103.21 cents US as the U.S. Commerce Department reported that retail sales in May beat forecasts, even as they declined 0.2 per cent. But that was far less than the 0.7 per cent slide that economists expected.

Excluding autos, economists expected that sales would be flat. In fact, they rose by 0.3 per cent.

The price of oil had slipped below US$97 a barrel Tuesday on concern a weakening global economy is undermining crude demand, but turned around following the retail data.

The July crude contract on the New York Mercantile Exchange gained $2.07 to US$99.37 a barrel.

Prices slid almost US$5 over the last two sessions with prices also under pressure from a report which said Saudi Arabia plans to boost its crude production.

Metal prices headed higher with the July copper contract up 12 cents to US$4.15 a pound following four days of losses.

Bullion prices also advanced with the August contract in New York ahead $8.80 to US$1,524.40 an ounce.

Traders were encouraged by better than expected inflation data from China.

The government said Tuesday that consumer prices rose 5.5 per cent in May. Though that was the highest in almost three years, it was not as high as some forecasts had suggested.

Still, the Chinese government increased the reserves banks are required to hold by a further 0.5 percentage point to a record 21.5 per cent of deposits. The sixth increase this year is designed to help keep a lid on inflation.

There was some relief in the markets that China did not raise interest rates though that is expected to happen again soon.