Canadian dollar closes little changed amid higher crude oil prices, lower copper

TORONTO – The Canadian dollar closed slightly higher Friday amid mixed commodity prices.

The loonie edged up 0.03 of a cent to 99.9 cents US on top of a 0.25 of a cent Thursday on signs from the U.S. Federal Reserve that further quantitative easing could be on the way. This involves the central bank printing more money in order to buy up bonds.

The Canadian currency lost about nine-tenths of a cent in the two days following the U.S. election on Nov. 6, which left the Washington political landscape little changed.

The results increased pessimism that Congress would be able to stop the U.S. economy from going over the so-called fiscal cliff at the end of the year, which would involve a tremendous shock to the economy as a series of tax hikes and automatic spending are scheduled to take hold.

Since then, the loonie has traded in a narrow band below parity with the greenback.

But analysts say the Canadian currency could find some lift when Ottawa unveils new foreign investment guidelines.

“There are rumours of an impending release, either this week or next, of new guidelines,” said Scotia Capital currency strategist Eric Theoret.

“The clarity provided by the new rules would likely be Canadian-dollar supportive, given the considerable and ongoing interest in Canadian resource assets.”

The federal government is currently considering whether a $15.1-billion offer for energy giant Nexen (TSX:NXY) by China National Offshore Oil Co., a state-controlled oil company, can go through.

Commodity prices were mixed with December crude on the New York Mercantile Exchange up $1.22 to US$86.67 a barrel as investors monitored the fighting between Israel and militants in Gaza, and the effect it might have on oil supplies. So far supplies have been ample. But they could be disrupted if the conflict between Israel and Hamas in Gaza spreads and further destabilizes the region.

A higher U.S. dollar and demand concerns helped push December copper down one cent to US$3.45 a pound while December gold bullion was up 90 cents at US$1,714.70 an ounce.

A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.