Canadian dollar advances on stimulus hopes rising commodity prices

Canadian dollar advances on stimulus hopes, rising commodity prices TORONTO – The Canadian dollar closed at a two-month high Thursday as a rising appetite for risk persuaded investors to buy into resource-based currencies such as the loonie.The loonie was also supported by higher prices for oil and copper, rising 0.29 of a cent to 99.23 cents US, its highest close since May 15.Traders felt more confident that the U.S. Federal Reserve is ready to help with stimulus in the future.U.S. Federal Reserve Chairman Ben Bernanke wrapped up two days of testimony before Congress on Wednesday. And while he did not indicate that another round of stimulus was imminent, his comments led investors to believe further action remained an option.The Fed has already completed two programs of asset purchases, which have the effect of increasing the supply of money, which largely ends up in financial markets.Oil closed at its highest level since mid-May, with the August crude contract on the New York Mercantile Exchange up $2.79 to US$92.66 a barrel.Oil had risen to a seven-week high Wednesday after the U.S. Energy Information Administration reported that average oil demand increased last week in the U.S. for the third week in a row. The escalating conflict in Syria and renewed tensions between Iran and Israel are also contributing to oil’s rise.Copper, viewed as an economic bellwether as it is used in so many industries, ran ahead six cents to US$3.53 a pound.Bullion prices advanced $9.60 to US$1,580.40 an ounce.Traders also took in data which showed a surge in U.S. jobless benefits. The Labour Department says applications rose by 34,000 to a seasonally adjusted 386,000 last week, reversing a big drop the previous week. But the figures may have been distorted by seasonal factors.But traders were especially disappointed that sales of existing U.S. homes in June fell by 5.4 per cent to a seasonally adjusted annual rate of 4.37 million, much lower than the 4.65 million that was expected.Also, manufacturing activity in the Philadelphia region rebounded only slightly in July. The Federal Reserve Bank of Philadelphia’s diffusion index rose to negative 12.9 in July from negative 16.6 in June. This is the third straight monthly reading below zero, indicating contraction.Meanwhile, a Spanish bond auction earlier did little to alleviate concerns over the country ahead of a Friday conference call between eurozone finance ministers.The Treasury sold €2.96 billion in bonds maturing in 2014, 2017 and 2019. Demand was roughly two times the amount on offer for each issue. But the interest rate on the five-year debt rose sharply to 6.46 per cent, from 5.54 per cent at the last such auction on July 5. The Treasury provided no comparable rates for the other maturities.Eurozone finance ministers are expected to give final approval on Friday for a bailout package of up to €100 billion for Spain’s troubled banks. The banks’ bailout was first announced in June, but it has failed to ease worries about Spain’s public finances. by Malcolm Morrison, The Canadian Press Posted Jul 19, 2012 4:38 pm MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email