TORONTO – The Canadian dollar closed Wednesday against the greenback amid hopes that the U.S. Federal Reserve will provide more stimulus to keep the economic recovery on track.
Meanwhile, a report indicated Chinese authorities have succeeded in engineering a “soft landing” for the country’s economy.
The currency, which is particularly sensitive to commodity values, also benefited from rising prices for oil and metals and gained 0.5 of a cent to 98.5 cents US.
Helping sentiment Wednesday was a Wall Street Journal report that the Fed is moving closer to taking new steps to spur the American economy. Central bankers could take new steps at their meeting next week. But the WSJ said the Fed may wait until September to get more information on the pace of economic growth.
Meanwhile, European Central Bank policymaker Ewald Nowotny raised the prospect that the European Stability Mechanism, the eurozone’s planned permanent bailout fund, could be given a banking licence. That would give it the ability to borrow money from the ECB, increasing its financial resources.
The International Monetary Fund says China has achieved a soft landing in its economic slowdown, as authorities sought to cool an overheated economy and bring down high inflation.
The IMF praised China’s leaders for adjusting policies to help counter the malaise plaguing the global economy that has also slowed robust growth in China and other emerging nations.
China’s second-quarter growth fell to a three-year low of 7.6 per cent. Analysts say a rebound might begin in the second half but could take longer to take root and be weaker than previously expected.
Commodity prices were higher with the September crude contract on the New York Mercantile Exchange closing up 47 cents to US$88.97 a barrel.
Copper prices were up two cents to US$3.37 a pound while bullion advanced $31.90 to US$1,608.10 an ounce.