TORONTO - The Canadian dollar closed lower Friday as markets worried about economic damage arising from surging oil prices.
The commodity-sensitive currency was down 0.21 of a cent to 100.03 cents US.
The April crude contract on the New York Mercantile Exchange ran ahead $1.94 to US$109.77 a barrel, its highest level since May, 2011.
That was on top of a $1.50 advance on Thursday amid data showing the number of Americans seeking unemployment benefits last week was unchanged and that the four-week average was the lowest in four years. Other data showed U.S. house prices rising at the end of last year.
Concerns about Iran have been widely responsible for crude jumping from US$96 a barrel earlier this month amid growing tension over the country's nuclear program and fears global crude supplies could be disrupted.
But economists are voicing concern that a continuing run-up in oil prices could threaten the fragile economic recovery in the U.S. and deepen a recession in Europe.
That has kept the loonie lower because of worries about damage to the economy of Canada's biggest trading partner.
"The Canadian dollar's inability to rally in an environment of elevated oil prices is a reflection of the negative impact of high energy prices on the U.S. economy," said Scotia Capital currency strategist Eric Theoret.
"The dollar will continue to see movement driven by external developments, however limited, given the lack of domestic data releases."
Metal prices also advanced amid speculation that local governments in China may relax restrictions on the property market and monetary authorities could tweak policy to stimulate growth.
Copper prices are up more than four per cent this week after the People’s Bank of China announced last weekend it was lessening reserve requirements at banks to encourage lending. China is the world’s biggest consumer of copper, viewed as an economic barometer as it is used in so many businesses.
The March copper contract was ahead six cents to US$3.86 a pound.
Bullion prices pulled back as the April contract shed $9.90 to US$1,776.40 an ounce.
Over the weekend, investors will be interested in what transpires at a meeting of the G20 finance ministers and central bank governors in Mexico. While the gathering will focus on promoting global economic stability and growth, Europe’s debt crisis will remain a key topic.
In particular, European officials will press for countries like the U.S., China and the U.K. to allow the International Monetary Fund to contribute more money to eurozone rescue measures. But several countries are reluctant to expose the IMF to more risk in Europe.