File photo of Canadian dollars.Jeff McIntosh/The Canadian Press
The Canadian dollar closed higher Monday as the U.S. dollar weakened against a variety of currencies and commodity prices moved higher.The loonie rose 0.51 of a cent to 98.85 cents (U.S.) as the greenback weakened ahead of a two-day meeting on interest rates by the U.S. Federal Reserve Board.
The Fed wraps up its two-day meeting Wednesday and investors are looking to see how supportive officials are in extending its third round of quantitative easing. That easing has taken the form of the Fed spending $85-billion a month on mortgage-backed securities and government Treasuries to keep long-term rates low and encourage lending.
The policies also raise the risk of inflation and gold is seen as a hedge against rising prices.
There was also positive economic data Monday from Canada's largest trading partner.
U.S. consumer spending increased 0.2 per cent in March, a sign that Americans are spending more despite the imposition of higher payroll taxes at the start of the year.
Other data showed that the number of Americans who signed contracts to buy homes rose in March to the highest level in three years.
Prices were higher across the board on commodity markets Monday morning with the June crude contract on the New York Mercantile Exchange ahead $1.50 to $94.50 a barrel.
July copper in New York gained 4 cents to $3.23 a pound.
Gold prices also advanced amid a weak U.S. dollar with the June contract in New York ahead $13.80 to $1,467.40 an ounce.
Traders also looked ahead to other important economic data coming out during the week.
On Tuesday, economists expect Statistics Canada to report that Canadian gross domestic product grew by 0.2 per cent in February following a similar advance in January.
The merchandise trade balance for March comes out Thursday and the agency is expected to report that the trade deficit narrowed to $700-million (Canadian) from $1.05-billion the previous month.
Meanwhile, there are also high hopes that the European Central Bank will announce a rate cut on Thursday amid deteriorating economic conditions across the euro zone. Analysts think a cut of 0.25 of a percentage point to 0.50 per cent could be in the cards, which would be the ECB's first rate cut since mid-2012 despite a deepening recession.
And at the end of the week, the U.S. government is expected to announce that the economy created about 150,000 jobs in April, with the unemployment rate holding steady at 7.6 per cent.
Canadian jobs data for April come out the following Friday.