Canadian dollar up, commodities gain amid hopes for central bank action

TORONTO – The Canadian dollar advanced Tuesday, supported by strong gains in commodity prices as traders looked to central banks to take action to keep a fragile global economic recovery on track.

The loonie rose 0.18 of a cent to 98.4 cents US from the close on Friday before the Canada Day holiday.

Some analysts expect the European Central Bank to cut lending rates and the Bank of England to boost money in circulation at meetings later this week. There are also hopes that Japan and China will announce new stimulus measures.

Rising expectations for central bank help come at a time of heightened concerns that the U.S. economy could be stalling after the Institute for Supply Management said Monday that U.S. manufacturing shrank in June for the first time in almost three years.

Oil prices made a particularly strong gain as traders also closely watch the impact of tighter sanctions starting July 1 by the U.S. and Europe against Iran over the country’s nuclear program. Iran, OPEC’s second-biggest producer, is finding fewer countries willing to buy its crude, which could pinch global supplies.

The August crude contract on the New York Mercantile Exchange ahead $1.91 to US$85.66 a barrel.

Copper futures jumped six cents to US$3.53 a pound while bullion gained $16.80 to US$1,614.50 an ounce.