Loonie holds steady above 101 cents US
The Canadian dollar closed at its highest point in more than five months Wednesday amid positive U.S. economic data and moves to further stabilize the debt-laden eurozone.
The loonie's Bank of Canada close was 101.06, up 0.60 of a cent.
Canada's currency was buoyed by a report out of the U.S., Canada's largest trading partner, that the world's largest economy was expanding at a three per cent annual pace at the end of 2011. That was better than the 2.8 per cent pace the previous time the U.S. government released GDP data.
"With the economy appearing to finish 2011 with slightly more momentum, and with growth more evenly distributed, this supports our view of only a modest deceleration to a 2.5 per cent pace in the first quarter," said CIBC World Markets senior economist Andrew Grantham.
Another key index, the Chicago Purchasing Manager's index, echoed the recovery theme on Wednesday, with a reading of came in at 64. That's up from 60.2 last month and a ten-month high. The Chicago PMI is a gauge of the manufacturing sector, and any reading over 50 implies growth in a key sector of America's economy.
The April crude contract on the New York Mercantile Exchange closed up 52 cents US at $107.07 a barrel.
April bullion tumbled $77.10, to $1,711.30 US as comments by U.S. Federal Reserve chairman Ben Bernanke appeared to suggest the Fed is less likely to adopt further steps to boost growth.
The appetite for riskier currencies such as the loonie — and away from the perceived safety of the U.S. dollar — was also supported by a move by the European Central Bank to make 529.5 billion euros worth of low-interest loans to banks, the second round of a massive credit infusion. About 800 banks made bids for the loans.
"The number of banks suggest that participation was more widely dispersed across the banking sector and that the funds will be used for both funding requirements and carry trades," said Scotia Capital chief currency strategist Camilla Sutton.
"Accordingly it is positive for risk assets" like the loonie, she said.
With files from The Canadian Press