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Canadian dollar rises as commodities rise, traders look to U.S. election outcome

A Canadian dollar, left, and a Euro are seen next to a series of U.S. dollars in this January 26, 2011 photo in Montreal. THE CANADIAN PRESS/Paul Chiasson
November 06, 2012 - 8:35 AM

TORONTO - The Canadian dollar was higher Tuesday morning as commodity prices advanced and traders focused on an extremely tight U.S. presidential race.

The loonie rose 0.24 of a cent to 100.57 cents US.

"Election day comes with the presidential race too close to call and some trepidation about whether a firm winner might even be declared by tomorrow," said a commentary from RBC Dominion Securities.

Whichever way the contest plays out, the big hope is that the result will be clear enough to avoid a re-run of 2000 when the result was only known weeks later after a U.S. Supreme Court decision. Above all, traders hope that Democrats and Republicans will get down to the business of arriving at a budget agreement that will avert an automatic increase in taxes and spending cuts that could be imposed at the start of 2013.

This so-called fiscal cliff is particularly alarming as economists predict the subsequent shock from the higher taxes and deep automatic cuts in military and domestic spending would send the economy back into recession.

Commodity prices were higher with the December crude contract in New York up 31 cents to US$85.96 a barrel.

December copper added a penny to US$3.48 a pound while December bullion climbed $6.70 to US$1,689.90 an ounce.

Greece was also in focus as legislators prepare to vote on a €13.5-billion package of spending cuts and tax increases over the next two years that are needed in order to secure another round of rescue loans.

The outcome of the vote is far from certain due to disagreements in the five-month-old coalition government and a reluctance among centre-left legislators to approve yet more austerity measures. But rejection of the savings package would leave Greece facing the threat of a default on its mountain of debt that could force it to eventually exit the euro bloc.

News from © The Canadian Press, 2012
The Canadian Press

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