TORonTO – The Canadian dollar was higher Wednesday amid rising commodity prices and positive economic news from China.
The currency rose 0.35 of a cent to 101.09 cents US a day after the Bank of Canada maintained its tightening bias for future interest rate hikes and mentioned the possibility of high household debt levels playing a role in raising rates.
Traders also looked ahead to the release of the Bank of Canadas monetary policy report at mid-morning.
“(It) will fill in the blanks from yesterdays rate statement in terms of the expected quarterly growth and inflation patterns, provide detailed forecasts on the global outlook and also some explanation of what is behind their current thinking,” said Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities.
Oil and metal prices were higher after sustaining sharp losses Tuesday as disappointing U.S. earnings reports reflected deteriorating economic conditions.
The December crude contract on the New York Mercantile Exchange was up 16 cents to US$86.83 a barrel after sliding almost $2 on Tuesday.
And December copper added a penny to US$3.58 a pound. Worries about deteriorating economic conditions have pushed copper down 18 cents in the previous four sessions.
December gold bullion climbed 70 cents to US$1,710.10 an ounce.
Market sentiment was helped along by positive news from China, the worlds second-biggest economy.
A preliminary version of HSBCs monthly purchasing managers index rose to a three-month high of 49.1 points. That was still below the 50-point level that indicates an expansion but nevertheless a strong improvement from Septembers 47.9.
The news wasnt so positive out of Europe wher a key survey of business activity, the so-called purchasing managers index published by financial data company Markit, fell in October to its lowest level in over three years. A measure of German business confidence also fell.
Also on tap is the U.S. Federal Reserves statement on interest rates at mid-afternoon. Analysts say not much is expected from the statement since the central bank announced a third round of economic stimulus in September.
