The Canadian dollar closed higher Thursday while the greenback fell after U.S. lawmakers passed legislation that averts a potential default and reopens the American government following a partial shutdown.
The loonie ended up 0.38 of a cent at 97.15 cents U.S. after the Senate and House of Representatives passed a measure Wednesday night that reopens the government through Jan. 15 and permits the U.S. Treasury to borrow normally through Feb. 7 or perhaps a month longer.
It includes nothing for Republicans demanding changes to President Barack Obama’s signature health care overhaul.
The deal was reached just before a deadline when the U.S. borrowing authority would have expired, meaning the government would start to run out of money to pay creditors.
However, enthusiasm for the bipartisan deal was muted by the realization that the two sides will likely be bickering again in just a matter of months.
“The uncertainty has not been removed, just pushed a few months down the road, with the borrowing authority extended to early February and the budget lasting to mid-January,” observed Simon Smith, chief economist with FxPro in London.
“The honeymoon period will be short, if indeed there is one, before the negotiations and demands start again.”
Worries that the U.S. deal to avoid default only postpones the debt problems helped push most commodity prices lower.
Commodity prices were mixed as the November crude oil contract on the New York Mercantile Exchange lost $1.62 to $100.67 a barrel.
December copper slipped one 1 cent to $3.30 a pound while December gold bullion gained $40.70 to $1,323 an ounce.
Bullion prices advanced as traders reckoned that the economic damage resulting from the partial U.S. government shutdown will further delay any plans by the Federal Reserve to cut back on key stimulus.