Loonie up amid rising commodities, Moody’s move to confirm Spain’s debt rating

TORONTO – The Canadian dollar advanced Wednesday amid higher oil and gold prices and improving risk sentiment after after Moody’s rating agency did not cut its credit grade on Spain to junk status, as had been widely feared in recent weeks.

The dollar gained 0.28 of a cent to 101.62 cents US after tumbling 0.7 of a cent Tuesday. The dollar sold off in the wake of a speech late Monday by Bank of Canada governor Mark Carney, which traders interpreted as containing a more dovish tone toward the possibility of hiking rates. The bank makes its next announcement on interest rates next Tuesday.

Canada’s commodity sensitive currency was supported by rising crude as the November contract on the New York Mercantile Exchange gained 39 cents to US$92.48 a barrel.

December copper was unchanged at US$3.70 a pound while December gold gained $5.40 to US$1,751.30 an ounce.

Moody’s said after the European market close on Tuesday that it was keeping its Baa3 rating on Spain, the lowest investment grade.

Investors think it’s only a matter of time before Spain will make a request for help to Europe’s bailout fund, a necessary condition for the European Central Bank to start buying its bonds in the markets.

The Spanish government said Wednesday it will decide within the next few weeks whether to ask for outside financial help.