06/28/2011 05:00 EDT | Updated 08/28/2011 05:12 EDT

Loonie Gains Half A Cent Against U.S. Dollar

Flickr: Like_the_Grand_Canyon

THE CANADIAN PRESS -- TORONTO - The Canadian dollar closed nearly half a cent higher against the U.S. dollar Tuesday as commodity prices rebounded from several days of decline.

The loonie was up 0.41 of a cent to 101.76 cents US as oil gained back some ground lost after last week's decision by the International Energy Agency to release 60 million barrels of crude over 30 days.

Oil for August delivery was up $2.28 to close at $92.89 a barrel on the New York Mercantile Exchange.

"We are to a certain extent a petro dollar and for today, anyway, it seems the energy complex is really driving the market and driving the currency a little bit as well," said Blair Falconer, portfolio manager at HSBC Securities.

The Canadian dollar is considered a currency to buy when investors have faith that the global economy is going relatively well, he said. Tuesday's move upward also indicated that investors appeared more confident ahead of a Greek parliamentary vote on a new austerity plan needed for the country to receive its rescue funds and avert a debt default.

The August gold contract gained $3.80 to $1,500.20, while the July copper contract added four cents to $4.09.

Traders also reacted to mixed economic data out of the U.S.

The Standard & Poor's/Case-Shiller home-price index showed home prices in major U.S. cities have risen for the first time in eight months, boosted by an annual flurry of spring buyers.

But the Conference Board's U.S. consumer confidence index slipped to 58.5 in June — a seven-month low. That was down from a revised 61.7 in May. Economists had expected the figure to edge up to 61.

Canadian economic data this week, including the consumer price index report expected Wednesday and gross domestic product data Thursday, could influence the loonie's direction.

The Bank of Canada has suggested that growth in the second quarter will slip below two per cent.

But analysts believe Greece will continue to be the driving force.

"The U.S. Dollar is slightly easier as there is greater confidence that Greece will see approval of tightening measures to ensure against its debt failure," said Bob Tebbutt, vice-president of Peregrine Financial Group.

"This has increased risk attitudes that has pushed most commodity markets higher and pushed the U.S. dollar down from its recent highs against most currencies."

Greek lawmakers will vote Wednesday and Thursday on a $40 billion austerity plan, government spending cuts that European officials say are a necessary condition to receive the next instalment of Greece's $156 billion bailout loan from the European Union and the International Monetary Fund.

If Greece rejects the cuts, it could lead to a debt default and spread instability in other financially troubled European countries.