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Loonie soars to nearly 10-month high as oil prices push above US$44 a barrel

TORONTO – The Canadian dollar continued its recent ascension Tuesday to touch a level not seen in nearly 10 months as rising oil prices again pushed above US$44 a barrel.

The loonie climbed 0.40 of a U.S. cent to 79.23 cents US, its highest close since July 3 when the currency finished at 79.62 cents US. It found support from crude prices as the June contract for West Texas Intermediate crude shot up $1.40 to US$44.04 a barrel.

It was a different story on North American stock markets, which were relative flat throughout the day.

Toronto’s S&P/TSX composite index added 13.45 points to 13,809.44, nudged up by increases in the metals, materials and energy sectors.

South of the border, U.S. markets traded in a narrow range as investors await the outcome of the latest policy rate decision of the U.S. Federal Reserve. The Fed wraps up the two-day meeting on Wednesday.

The Dow Jones industrial average gained 13.08 points at 17,990.32, while the broader S&P 500 added 3.91 points to 2,091.70. The Nasdaq composite shed 7.48 points to 4,888.31.

Investors are cautious prior to the policy announcement, even though the majority do not expect any radical change to the central bank’s go-slow approach to interest rates.

“People will be trying to see if they’re going to be signalling towards a June hike or not,” said Colin Cieszynski, chief market strategist at CMC Markets.

“That’s why we’re seeing people sitting on their hands and say let’s see what they signal and drive on from there.”

The Fed raised rates from record lows in December, but since then, it has expressed concerns over weakness in the global economy and signalled that it is willing to wait for those risks to subside.

The minutes of their March meeting noted that several Fed officials felt that raising rates again in April “would signal a sense of urgency they did not think was appropriate.”

The Fed’s rate hike in December was its first in nearly a decade, and it ended a seven-year period in which it had kept its benchmark rate near zero following the 2008-09 financial crisis.

Elsewhere in commodities, June natural gas shed three cents to US$2.16 per mmBtu, while July copper was off a penny at US$2.24 a pound and June gold gained $3.20 to US$1,243.40 a troy ounce.

— With files from The Associated Press

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