Loonie jumps, U.S. dollar weakens as Fed signals no rush in raising rates

TORONTO – The Canadian dollar closed sharply higher Wednesday as the Federal Reserve signalled it wants to see further improvements in employment and inflation data before hiking interest rates.

The loonie surged 1.28 U.S. cents to 79.55 cents US .

The American currency weakened after the central bank also signalled that there could be a rate increase later this year by no longer saying it will be “patient” in starting to raise its benchmark rate.

Analysts noted that a rate hike in June is still a possibility but the Fed won’t be in a hurry to raise rates aggressively.

Meanwhile, oil prices erased early losses to move higher after six days of steep declines on supply concerns. The April contract in New York gained $1.20 to US$44.66 a barrel even as the U.S. Energy Information Administration reported a 10th straight weekly increase in crude supplies that was more than double what analysts expected.

Inventories have been steadily rising to a point where analysts are concerned that storage space could soon be at a premium, which could drive prices down even further. Prices are already down 60 per cent from the highs of last summer amid a global oversupply of crude.

May copper fell six cents to US$2.57 a pound while April gold bullion moved $3.10 higher to US$1,151.30 an ounce.