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Canadian dollar dips as US budget talks progress, commodities mixed

TORONTO – The Canadian dollar fell slightly Tuesday as investors became more confident that U.S. leaders could reach a budget agreement in the coming days.

The loonie was down 0.1 of a cent to 101.56 cents US near midday.

House Speaker John Boehner told reporters Tuesday that he remains hopeful that a fiscal cliff compromise can be reached but, says President Barack Obama has yet to offer a balanced deficit-cutting plan. Boehner said that Obama’s latest offer for $1.3 trillion in tax increases over the next decade with $850 billion in spending cuts is not balanced enough.

But Boehner’s plan also faces opposition from other quarters. Senate Majority Leader Harry Reid says the Boehner plan can’t pass the Democratic-run Senate.

If congressional Republicans, Democrats and the White House can’t reach a deal by Jan. 1, tax cuts enacted a decade ago for all Americans will expire and government programs will be cut across the board. The combination could lead to a U.S. recession that could spread to other economies of the world.

The commodity-heavy Loonie also faced a move from Australia’s central bank to cut interest rates, saying that it believes mining investment is reaching its peak.

In commodities, oil prices trekked higher as the January crude contract on the New York Mercantile Exchange rose 89 cents to US$88.09 a barrel.

March copper rose 0.3 of a cent to US$3.67 a pound while February gold bullion moved down $4.90 to US$1,693.30 an ounce.