Loonie rises as violence in Iraq escalates, commodities push higher

Photo: The Canadian Press. All rights reserved.

A loonie is pictured in North Vancouver Dec.31, 2013. THE CANADIAN PRESS/Jonathan Hayward

TORONTO - The Canadian dollar rose Monday as a number of commodities, with the exception of oil, pushed higher amid escalating violence in Iraq.

The Canadian dollar was up 0.13 of a cent to 92.24 cents US.

The conflict in Iraq worsened over the weekend amid reports that the al-Qaida-inspired militants who captured two key Iraqi cities last week were carried out a massacre. On Sunday, the militants posted graphic photos of truckloads of Iraqi soldiers that they apparently captured and killed and vowed to march on Baghdad.

The northern town of Tal Afar has become the latest to fall to the group, which has already captured a vast swath of territory including Iraq's second-largest city, Mosul.

The city lies in an area that is a major gateway for Iraqi oil. While the loss of the city has no immediate effect on oil exports, now at more than three million barrels a day, it adds to concerns over security and the country's plans to expand oil production. The situation in the country's Sunni heartland, previously controlled by U.S. forces, has triggered fears that the world's oil supplies may be put at risk.

Still, the July crude contract dipped a penny to US$106.90 a barrel after running up last week.

Meanwhile, the growing instability in Iraq pushed traders into other over more volatile stocks.

August gold bullion added $1.20 to US$1,275.30 an ounce, while July copper rose two cents to US$3.05 a pound.

In addition to instability in Iraq, markets were looking for direction from a two-day meeting of the U.S. Federal Reserve that begins on Tuesday and the latest release of the consumer price index in Canada at the end of the week.