By Malcolm Morrison TORONTO _ The Canadian dollar was higher Monday morning amid a U.S. dollar that weakened across the board and optimism that the controversial Keystone XL pipeline will get U.S. approval. The loonie rose 0.48 of a cent to 90.26 cents US since the pipeline would boost shipments from the oilsands and give a lift to the Canadian economy. The gain followed a rise of about 1/5 of a cent Friday after a report by the U.S. State Department concluded that the proposed TransCanada (TSX:TRP) pipeline would produce less greenhouse gas emissions compared with transporting oil to the Gulf of Mexico by rail. It also said the industry is driven by too many factors to pin everything on a single pipeline _ an apparent rejection of the argument by environmental groups that stopping Keystone XL would thwart the oilsands. "This is likely to sway Secretary of State Kerry to provide a favourable recommendation to President Obama on the construction of the pipeline, which will provide added capacity for Canadian oil to flow into the U.S.," observed Camilla Sutton , chief FX strategist for Scotiabank. Emerging market worries also weighed on financial markets as data showing a slowdown in Chinese manufacturing added to concerns about countries such as Turkey , South Africa and India , all of which had to hike rates last week to support their currencies. These countries and others have been hit by an outflow of investor funds as the U.S. Federal Reserve cuts back on its massive monthly bond purchases, a move that kept long-term rates low and resulted in a flow of cheap money into those markets. But the primary worry is that weaker growth in those countries could drag down developed markets. China's official purchasing managers' index showed the manufacturing sector continuing to expand during January but at a slower pace, coming in at 51.5, down from 52.5 in December. Any reading above 50 signals expansion. Traders also awaited the release of the latest snapshot of the American manufacturing sector coming out mid-morning. The Institute for Supply Management is expected to also show slower expansion with a reading of 56, down from 56.5 in December. The major economic data for the week comes out Friday _ December employment reports for the U.S. and Canada . Economists expect U.S. job growth of around 193,000 after a disappointing read of only 74,000. But markets were inclined to blame much of that sub-par performance on adverse weather conditions. Statistics Canada was expected to report the economy created about 15,000 jobs after 44,000 positions were erased in December. Commodity prices were unaffected by the Chinese data as HSBC's manufacturing report from last week had already braced investors for another indication of a slowdown in the world's second-biggest economy. March crude in New York dipped added eight cents to US$97.57 . March copper was unchanged after falling about 2.25 per cent last week and April gold gained $6.90 to US$1,246.70 an ounce.
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