The Canadian dollar hit a two-month high against the U.S. greenback on Monday and North American stock markets posted triple-digit gains following upbeat economic reports from the U.S., China and Europe.

The loonie closed the day's trading at 96.02 cents US, up 0.87 cents from Thursday's close. Canada's dollar rose against most major foreign currencies, according to Bloomberg data. The Canadian dollar gained 16 per cent against its American counterpart in 2009.

The Canadian dollar gained 16 per cent against its American counterpart in 2009. (Paul Chiasson/Canadian Press)

The Canadian dollar typically rises in tandem with higher commodity prices — especially oil. Crude futures jumped $2.15 a barrel in Monday trading to settle at $81.51 US after several reports suggested global growth prospects were improving.

Veteran commodity and currency analyst Dennis Gartman has been bullish on the loonie for years and is still in the "dollar's going higher" camp.

"We're going to parity and a good deal beyond," he told CBC News on Monday.

"The world looks to Canada right now as a place it can buy the stuff that it needs to keep the global economy moving forward," he said, citing Canada's abundance of natural and agricultural resources."You've got all the things the world needs."

The Institute for Supply Management reported Monday that its index of U.S. manufacturing rose to a better-than-expected 55.9 last month from 53.6 in November. That's its highest level in almost three years. Any figure above 50 signals expansion.

In China — a big purchaser of Canadian-sourced commodities — manufacturing in December expanded at its fastest rate in more than five years.

GM reported Monday that its December sales in China almost doubled to a new monthly high of 189,793 vehicles.

A measure of European manufacturing hit a 21-month high in December, led by recovering economies in Germany and France, Markit Economics said Monday.

Triple-digit gains

Higher commodity prices and upbeat economic news sent stock markets to a solid gain in the first trading day of 2010.

The S&P/TSX composite index closed up 120.79 points to 11,866.9. The Dow Jones industrial average surged 155.91 points to 10,583.96 — its highest close in more than 15 months. The Nasdaq composite index climbed 39.27 points to 2,308.42.

"The news is better than expected on the economy and certainly in the U.S. and China, which are both global growth drivers," said Kate Warne, Canadian markets specialist at Edward Jones. "I think that's what everybody is watching, so we have commodities higher and no surprise the TSX is up as well."

Other commodities also surged higher. Copper futures rose six cents to $3.41 US a pound as the market absorbed the upbeat economic news. Adding to the upward pressure was the start of a strike at a big copper mine in Chile.

Natural gas futures climbed 29 cents to $5.86 as cold weather gripped much of eastern and central North America.

Gold futures jumped more than $22.10 an ounce to $1,118.30 US as the U.S. dollar weakened against a basket of world currencies.

With files from The Canadian Press