Loonie nudges close to parity - Action News
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Loonie nudges close to parity

The Canadian dollar hits a five-month high, once again on the verge of trading at parity with the U.S. currency.

Copper, lumber, crude, gold make gains

The Canadian dollar rose to a five-month high Wednesday as itonce again flirted withparity with the U.S. currency.

The loonie wentashigh as 99.88 cents US in intraday trading before slipping back to close at 99.52 cents, a gain of almost three-fifths of a cent from Tuesday.

Lumber for next-month delivery jumped by the Chicago Mercantile Exchange's $10 trading limit, or 4.3 per cent, to $254, the highest price since June 4. ((CBC))

"The strong psychological support represented by parity and the robust buying interest at that level will certainly make the next few points a definite grind, but well achievable under the right circumstances," Scotia Capital currency strategist Camilla Sutton wrote in a morning commentary.

The Canadian dollar last traded above par in April reaching $1.0052 US on April 21. But soon after, it slipped back diving as low as 92.18 cents US just a month later.

Since then, the dollar has been steadily moving higher as currency markets reacted to broad weakness in the U.S. dollar,higher interest rates in Canada and rising commodity prices.

Higher commodity pricesbuoy the loonie, since Canada is a net exporter of many raw materials, and many of those commodity prices continued to rise Wednesday.

Copper at 27-month high

The December copper contract on the New York Mercantile Exchange rose three cents to $3.82 US a pound. The contract at one point traded at $3.8385, its highest since July 8, 2008.

The move in copper washelpedafter China reported its September trade surplus stayed high at $16.9 billion US. China is the world's largest buyer of copper.

Lumberfor November delivery jumped by the Chicago Mercantile Exchange's $10limit, up 4.3 per cent to $254, the highest price since June 4.

The Novembercrude contractin New York gained $1.34 to settle at $83.01 US a barrel.

The December bullion contractgained $26.00 to a new all-time high of $1,372.70 US an ounce, surpassing the record a week earlier of $1,366 an ounce.

The Toronto Stock Exchange heavily weighted in commodities gained, with the benchmark S&P/TSX composite index moving up 98 points to close at 12,683. ET.

In New York, the Dow Jones industrial average added 76 points, or 0.7 per cent, to close at 11,096. The Nasdaq composite index climbed23 points, or 1.0 per cent, to 2,441 while the S&P 500 index was up eight points, or 0.7 per cent, to 1,178.

Comments from the U.S. Federal Reserve also served to depress the U.S. dollar. On Tuesday, the U.S. central bank revealed it is exploring a second round of what is termed "quantitative easing" basically an attempt to support the economy by flooding the financial system with money.

The loonie is still some distance from its all-time high of just above $1.10 US, reached in late 2007. But one analyst former RBC economist Patricia Croft garnered a fair bit of ink with her forecast last monththat the loonie would hit $1.15 US sometime next year.