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CONSUMER NEWS

Dollar touches a near 3-year high

Dollar touches a near 3-year high

CBC News
The Canadian dollar reached an almost three-year high Thursday before closing unchanged.

The Canadian dollar reached an almost three-year high Thursday before retreating from that level.

The loonie rose 0.29 of a cent to 101.82 cents US early in the day, but gave up all of that, closing unchanged at 101.53.

At its high, the dollar was at its strongest level since March 13, 2008. The rise came as crude oil reached close to two-year highs over worries that turmoil in the Mideast might disrupt shipments.

March oil closed up $1.37 at $86.36 US a barrel on the New York Mercantile Exchange.

Troops and tanks descended on demonstrators in the capital of the small Persian Gulf state of Bahrain. There were reports of a number of dead and injured. Bahrain is not a major oil-producing country, but it is strategically important to the U.S. as a home for the navy's 5th Fleet.

There have also been violent protests in Iran, Algeria, Yemen and Libya. Iran is the world's fourth-largest oil producer. Algeria and Libya are also important crude suppliers.

"There's a lot of traders concerned about what's going on in the Middle East and North Africa," said Mike Zarembski, senior commodity analyst at brokerage OptionsXpress Inc.

The move in the dollar came a day after the world's fourth-largest silver producer, Vancouver-based Pan American Silver Corp., said it would shift some of its currency holdings into Canadian dollars, in a bet that the U.S. dollar will fall further.

CEO Geoffrey Burns told analysts in a conference call that the countries behind the world's major currencies are carrying "ridiculous" debt levels and that Pan American was buying Canadian dollars "to provide more stability in the event we do see continued weakness in the U.S. dollar."

"It's not just the U.S. dollar," he said. "The euro, the Japanese yen are going to have extreme difficulty hanging onto their long-term values."

On the Toronto Stock Exchange, the main S&P/TSX composite index closed up 76.97 points at 14,136.15, after surging 130 points Wednesday to 14,059.18, its first close above the 14,000-mark since July 2008.

Copper prices continued to retreat from the latest record high reached on Monday. The March copper contract in New York edged up four cents to $4.51 US a pound.

Gold advances

Gold rose for a fourth session, with the April contract on the Nymex ahead $10.00, to $1,385.10 US an ounce.

Traders are looking to the latest reading of inflation at the end of the week for an indication of when the Bank of Canada will resume pushing interest rates higher.

Statistics Canada is expected to report Friday that the consumer price index rose by 0.2 per cent in January, driven largely by rising food and energy prices.

Economists say the small gain would push the annualized rate down to 2.3 per cent, from 2.4 per cent the previous month.

The central bank makes its next interest rate announcement on March 1.

With files from The Canadian Press and The Associated Press

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