TORONTO - The Canadian dollar fell against the American currency Monday as crude oil closed at a fresh 30-month high while traders looked to important economic data coming out during the week.
The loonie was down 0.33 of a cent to close at 103.36 cents US.
Oil prices jumped to fresh two-and-a-half year highs above US$108 a barrel, pushed upward by worries that the fighting in Libya could spread unrest to oil-rich countries in the Persian Gulf. There's also an expectation that an improving global economy will increase demand for oil..
The May crude contract on the New York Mercantile Exchange was up 53 cents to US$108.47 a barrel.
Other commodity prices advanced as the June bullion contract on the Nymex rose $4.10 to US$1,433 an ounce.
The May copper contract in New York was unchanged at US$4.26 a pound.
The main focus for markets this week is the European Central Bank's decision on interest rates Thursday. It is "universally expected" to hike rates a quarter point to 1.25 per cent to deal with rising inflation, said Mark Chandler, Head of Canada FIC Strategy at RBC Dominion Securities.
Traders also looked to a variety of Canadian economic events this week, including the release Monday of the Bank of Canada's Business Outlook Survey.
In its report, the central bank said that rising oil and food prices, along with the persistent strength of the loonie, are chipping away at plans in Canada's business community for hiring and investment.
The bank said that its new spring business outlook survey shows Canadian firms remain bullish about the future, but less so than three months ago.
The survey came out ahead of the Bank of Canada's next announcement on interest rates on April 12. The central bank is not expected to raise rates until later this year.
The major economic event of the week occurs Friday when Statistics Canada releases its March employment report. Economists expect that about 30,000 jobs were created last month.
Canadian housing starts figures for March will be also be released Friday.
On the corporate front, China's Minmetals Resources Ltd. is launching a C$6.3 billion unsolicited bid for Equinox Minerals (TSX:EQN), which is dual-listed on the Toronto and Australian exchanges.
However, the potential effect on the Canadian dollar "is fairly difficult to decipher, since Equinox is a Toronto registered company, with assets in Africa and the Middle East and its executives residing in Australia," observed Scotia Capital chief currency strategist Camilla Sutton.
"However, it does appear to be a Canadian dollar cash deal and the recent strength in the currency appears to support this as well."
The Canadian dollar has been pushed higher in the past by big corporate deals.
That's because a foreign buyer acquiring a Canadian company will need Canadian currency to close the deal, boosting demand for the loonie on financial markets.
