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Canadian dollar backs off amid U.S. ‘fiscal cliff’ worries

Canadian dollars.

Jeff McIntosh/THE CANADIAN PRESS

The Canadian dollar closed lower Thursday amid pessimism over the "fiscal cliff" standoff in the United States.

The currency was off 0.37 of a cent to $1.0051 (U.S.).

The "fiscal cliff" refers to the double-whammy of tax increases and spending cuts set to click in at the beginning of 2013 if U.S. lawmakers do not reach a budget deal.

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The combination would erode already weak U.S. economic growth and likely send the conomy back into recession, taking other global economies down along with it, including Canada's.

Senate Majority Leader Harry Reid said Thursday that the government appears headed over the "fiscal cliff" because of a lack of progress in negotiations between Republicans who control the House of Representatives and Democrats who control the Senate and White House.

Mr. Reid said it is up to congressional Republicans to come up with a plan that both houses would pass and President Barack Obama would sign.

Sentiment improved somewhat late in the day on word that the House will be back in session Sunday evening.

However, it was unclear what legislation the House might consider Sunday, since Speaker John Boehner is publicly insisting that the Senate must make the next move to avert the cliff.

Commodities were mixed with the February crude contract on the New York Mercantile Exchange down 11 cents to $90.87 a barrel.

March copper was unchanged at $3.60 a pound after rising 5 cents Wednesday. The gain, the largest in four weeks, came after workers rejected a wage proposal at BHP Billiton's Escondida mine in Chile, the world's biggest source of a metal, and viewed as an economic barometer.

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February gold bullion was up $3 to $1,663.70 an ounce.

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