Dollar gets boost from stronger commodities

By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar touched its highest level against the U.S. currency in nearly two months on Tuesday, as stronger commodity prices and hopes for economic stimulus packages by western governments boosted sentiment.

Bonds were largely higher across the curve, helped by a rebound in the bigger U.S. market, following a successful auction.

The Canadian currency finished at C$1.1828 to the U.S. dollar, or 84.55 U.S. cents, up from Monday's close at C$1.1900 to the U.S. dollar, or 84.03 U.S. cents.

Canada's dollar has been helped by the recent resurgence in oil prices, which rose above $50 a barrel during the session. But crude for February delivery settled down 23 cents at $48.58 a barrel, as weak U.S. economic data offset rising geopolitical tensions and OPEC production cuts.

The currency also found support from rising metal prices. Copper climbed to its highest level in nearly five weeks, while gold also finished higher.

Fluctuations in commodity prices often sway the currency as Canada is a major producer and exporter.

"I think generally the Canadian dollar is benefiting in the early days of 2009 from a tentative view that there could be an economic recovery globally by the second half of the year and also by some moderate firming in commodity prices," said Doug Porter, deputy chief economist, BMO Capital Markets.

Economic data will likely remain sour in coming months, analysts say, but there could be room for growing optimism.