TORONTO – The Canadian dollar closed higher Wednesday as commodity prices found lift in encouraging trade data from China.
The loonie was up 0.16 of a cent to 90.93 cents US as markets also digested Tuesday’s federal budget. Finance Minister Jim Flaherty delivered a budget close to balance, with a $2.9-billion deficit for 2014-15 and a $3-billion contingency fund.
Data showed that China’s trade growth accelerated in January as imports rose 10 per cent to US$107.2 billion, up from December’s 8.3 per cent growth. Exports rose 10.6 per cent to $126.7 billion, more than double the previous month’s 4.3 per cent expansion and the trade surplus widened to $31.9 billion.
All three numbers beat expectations and raised some doubts among economists.
“The strong export numbers have prompted renewed concerns about false invoicing, as trade partners didn’t show similar strength in their data,” observed BMO Capital Markets senior economist Benjamin Reitzes.
However, he also noted that the Lunar New Year holiday “can seriously distort the data.”
“So we should probably wait for next month’s numbers before pointing any fingers and making any judgments on how this report influences our growth outlook.”
Still the report helped alleviate worries about the world’s second-biggest economy. Markets had sold off early last week after other data showed manufacturing expanded at a much slower than expected pace at the beginning of the year.
Commodity prices moved higher as March crude on the New York Mercantile Exchange gained 43 cents to US$100.37 a barrel.
March copper rose four cents to US$3.26 a pound while April gold ticked $5.20 higher to US$1,295 an ounce.
There was also relief on markets after the U.S. Congress voted Tuesday night to extend the debt ceiling without any spending conditions. Republican legislators allowed a so-called clean bill, unlike other times in the past when the party insisted that any increase be matched by spending cuts.