Dollar up on rate speculation

The dollar rose Tuesday on the prospect that Canadian interest rates will start moving up more quickly than U.S. rates.

The Canadian dollar closed up .55 of a cent to 98.62 cents US.

The U.S. Federal Reserve's monetary policy committee, as expected, decided on Tuesday to keep rates flat in order to support a still-fragile economic recovery.

Canadian rates are widely expected to begin rising this summer. The prospect of a widening spread between Canadian and U.S. rates has helped lift the loonie toward parity with the greenback in recent months.

A falling U.S. dollar also led to higher gold and oil prices, since both commodities are priced in U.S. currency.

The April bullion contract on the Nymex closed up $17.10 to $1,122.20 US an ounce and the April crude contract finished up $1.90 to $81.70 US a barrel.

In Toronto, the S&P/TSX composite index — heavily weighted in commodity stocks — gained 80.60 points to end the day at 12,089.40.