The Canadian dollar marched closer to parity with its U.S. counterpart Wednesday, supported by higher commodity prices and the prospect of continued low American interest rates.

The loonie's official close, as recorded by the Bank of Canada at 4 p.m. ET, was 98.98 cents US, up .36 of a cent on the day, but it continued trading later on currency markets above the 99- cents level.

The Canadian dollar rose Wednesday, buoyed by the prospect of higher domestic interest rates and commodity prices. (Paul Chiasson/Canadian Press)

On Tuesday, the U.S. central bank said it will keep interest rates unchanged "for an extended period."

That raised the prospect that Canadian interest rates will begin rising before those in the U.S., increasing the value to foreigners of Canadian dollar-denominated debt and the demand for Canadian currency.

"Yesterday's announcement puts the Bank of Canada in a tough position," Dan Sumner, an economist with Edmonton-based ATB Financial, said in a commentary. "The Canadian economy is performing better than the US, which means interest rates here will probably begin rising sooner. However, with the continued worries about the Canadian dollar and Canada's export industries still fragile, raising rates will be no easy task."

Demand for the loonie is also expected to increase along with the appetite for Canadian commodities.

In Toronto, the S&P/TSX Composite Index finished up 11.3 points at 12,100.7. That came a day after it rose 81 points Tuesday after the U.S. Federal Reserve's decision on interest rates.

Crude rises as inventories disappoint

Oil prices made headway after a report showed U.S. crude inventories grew less than expected last week.

The April crude contract on the New York Mercantile Exchange climbed $1.23 to close at $82.93 US a barrel after the American Petroleum Institute reported that crude inventories rose by 400,000 barrels last week, far less than the increase of 1.9 million barrels that had been expected.

The April gold contract on the Nymex finished ahead by $1.80, to $1,124.00 US an ounce.

With files from The Canadian Press