TORONTO _ The Canadian dollar advanced Tuesday amid higher prices for oil and gold.
The loonie rose 0.23 of a cent to 87.32 cents US.
The currency slid almost four-tenths of a cent Monday to a five-year low as oil tumbled almost US$3. Prices were pressured by weak trade data from China that further depressed demand prospects and a report from Morgan Stanley that suggested prices for Brent crude, an international benchmark, could fall to as low as US$43 a barrel next year.
On Tuesday, the January crude contract in New York gained 66 cents to US$63.71 a barrel.
Oil prices have fallen a long way since averaging around US$105 a barrel mid-summer. But that was when prices were elevated by a more optimistic take on the global economy and geopolitical worries. But prices have slid since then as those concerns faded, the economic mood darkened and markets are now trying to work out a huge imbalance in supply and demand, made even more troublesome by the decision by the OPEC oil cartel to leave production levels unchanged.
Falling prices have helped drive the loonie lower as investors worry about the negative spinoff effects of lower crude on the Canadian economy, including bank lending and house prices. Elsewhere on the commodity markets, February gold gained $21.90 to US$1,216.80 an ounce while March copper dipped a penny to US$2.88 a pound.
Meanwhile, Fed concerns were back on the front burner ahead of the central bank's meeting on interest rates next week. The Wall Street Journal said Fed officials will likely affirm a plan to start raising short-term interest rates in 2015 and are debating eliminating a key phrase _ that rates will stay low for ``a considerable time.''
This report comes on the heels of data released last Friday that showed much better than expected job creation last month.