TORONTO – The Canadian dollar closed higher Friday but were off the highs of the day as the greenback strengthened late in the afternoon amid bullish comments on the U.S. economy from outgoing Federal Reserve chairman Ben Bernanke.
The loonie rose 0.3 of a cent to 93.99 cents US as Bernanke said that 2014 could be a better year for the U.S. economy.
Bernanke told the annual meeting of the American Economic Association that Americans’ finances have improved and the outlook for home sales is brighter. He also expects less drag from federal spending cuts and tax increases. Combined, those factors bode well for U.S. economic growth in coming quarters.
The Fed ended months of speculation last month when it announced it would reduce monthly purchases of bonds and other securities to US$75 billion, down from US$85 billion, starting in January. Those purchases are credited with supporting a strong rally on stock markets during 2013, including a 30 per cent surge in the S&P 500 to a record high.
Meanwhile, base metal prices backed off as China’s official non-manufacturing Purchasing Managers’ Index fell to a four month low, coming in at 54.6 in December from 56 in November. A reading above 50 indicates expansion.
The non-manufacturing PMI covers services including retail, aviation and software as well as the real-estate and construction sectors.
Other data released Thursday showed manufacturing sectors in China, the U.S. and Canada still expanding but at a slower pace.
March copper on the New York Mercantile Exchange lost three cents to US$3.35 a pound.
February crude on the Nymex slipped $1.48 to US$93.96 a barrel on top of a $3 slide from Thursday. Crude fell six per cent this past week due to growing inventories in the U.S. and an expected recovery in Libyan production.
February bullion gained $13.40 to US$1,238.60 an ounce.