Canadian dollar rises amid weak U.S. economic data, higher commodity prices

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TORONTO – The Canadian dollar closed higher Wednesday as the greenback fell amid weak U.S. economic data.

The loonie was ahead 0.19 of a cent to 93.27 cents US as the final revision to American economic growth in the first quarter showed that gross domestic product shrank 2.9 per cent, larger than the two per cent contraction economists had expected. However, the decline in economic performance was due in large part to severe winter weather.

Also, U.S. durable goods orders fell one per cent in May, against an expected one per cent gain. The drop was driven by sharp drop in demand for military equipment.

The showing Wednesday left the loonie up about 1.2 cents over the past week at a six-month high as oil and gold prices have advanced amid geopolitical concerns centred on a rising insurgency in Iraq and tensions between Ukraine and Russia.

The loonie had also found support from stronger than expected inflation data, which raised expectations that the Bank of Canada could raise interest rates sooner than thought.

On the commodity markets, August crude on the New York Mercantile Exchange gained 47 cents to US$106.50 a barrel.

Oil prices have risen steadily over the past couple of weeks amid a rising insurgency in Iraq. However, prices had stepped back over the previous two days as fears receded that the insurgency would greatly affect the country’s oil production and exports.

U.S. benchmark crude futures rose Wednesday after The Wall Street Journal reported that the U.S. government was loosening a long-standing ban by letting two companies sell American oil internationally. The newspaper said the Obama administration would allow foreign buyers to purchase a type of ultralight oil known as condensate, which can be turned into gasoline, jet fuel and diesel.

Metal prices erased early losses with July copper up two cents to US$3.17 a pound, while August gold bullion added $1.30 to US$1,322.60.

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