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Canadian dollars. (Jeff McIntosh/THE CANADIAN PRESS)
Canadian dollars. (Jeff McIntosh/THE CANADIAN PRESS)

Loonie advances as commodities rise, traders look to U.S. vote Add to ...

The Canadian dollar closed higher Tuesday as the greenback lost ground ahead of the results of an extremely tight U.S. presidential race.

The commodity-sensitive loonie also benefited as the lower greenback boosted prices for oil and metals, closing up 0.5 of a cent to $1.0083 (U.S.).

“Election day comes with the presidential race too close to call and some trepidation about whether a firm winner might even be declared by tomorrow,” said a commentary from RBC Dominion Securities.

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Whichever way the contest plays out, the big hope is that the result will be clear enough to avoid a rerun of 2000 when the result was only known weeks later after a U.S. Supreme Court decision. Above all, traders hope that Democrats and Republicans will get down to the business of arriving at a budget agreement that will avert an automatic increase in taxes and spending cuts that could be imposed at the start of 2013.

This so-called fiscal cliff is particularly alarming as economists predict the subsequent shock from the higher taxes and deep automatic cuts in military and domestic spending would send the U.S. economy back into recession.

The December crude contract in New York closed up $3.06 to $88.71 a barrel.

December copper added 4 cents to $3.51 a pound while December bullion climbed $31.80 to $1,715 an ounce.

Greece was also in focus as legislators prepared to vote on a €13.5-billion ($17.3-billion) package of spending cuts and tax increases over the next two years that are needed in order to secure another round of rescue loans.

The outcome of the vote Wednesday is far from certain due to disagreements in the five-month-old coalition government and a reluctance among centre-left legislators to approve yet more austerity measures. But rejection of the savings package would leave Greece facing the threat of a default on its mountain of debt that could force it to eventually exit the euro bloc.

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