TORONTO - The Canadian dollar was modestly higher against the U.S. currency Monday morning, benefitting from rising commodities as crude pushed past US$106 a barrel and nervous investors looked for safety in gold.

The loonie rose 0.11 of a cent to 103.02 cents US.

Oil prices surged for a second day as fighting between supporters and opponents of Libyan leader Moammar Gadhafi intensified over the weekend, raising fears that the fighting won't be over anytime soon. There has been a great deal of nervousness that the unrest in the biggest oil producer in Africa could spread to other oil-rich nations in the Mideast, particularly Saudi Arabia.

The April crude contract on the New York Mercantile Exchange jumped $2.42 to US$106.84 a barrel. Crude prices have advanced more than 18 per cent since Feb. 18.

"Oil is an important driver for the Canadian dollar," noted Scotia Capital chief currency strategist Camilla Sutton.

"Oil currently holds the tightest correlation with the currency, as interest rate spreads, equities, (the euro, Australian dollar) and risk aversion are all important, but still lagging oil."

Unrest in the Mideast sent the April gold contract on the Nymex up $15.20 to US$1,443.80 an ounce, up about US$6 from last Thursday's latest record high close.

Copper in New York was unchanged at US$4.48 a pound.

The European debt crisis was also in focus Monday following a warning from Moody’s Investor Services that Greece may have no option but to restructure its debts in the next couple of years despite the country’s euro110 billion (US$154 billion) bailout last May.

The agency slashed Greece’s rating by three notches to B1 from Ba1 and warned it may cut again if the government’s commitment to austerity wanes or international creditors become less willing to support the country.

Greece’s bond yields rose on the news, with the benchmark 10-year up 0.07 of a percentage point to 12.3 per cent — nine percentage points more than Germany’s, even though they share the same currency.

The downgrade "was taken largely in stride by the market with Greece already being on negative watch at the agency," said a commentary from RBC Capital Markets.

"The magnitude of the downgrade is surprising however and is a reminder that peripheral debt issues may be on the back-burner, but they have not gone away."

Source: http://www.winnipegfreepress.com/business/breakingnews/canadian-dollar-rises-crude-oil-surges-past-us106-gold-heads-to-record-levels-117514298.html