TORONTO – The Canadian dollar climbed by half a cent Thursday as crude prices extended gains for a sixth straight day, amid a dearth of economic news and continued uncertainty over U.S. interest rates.
The loonie advanced 0.55 of a cent to 78.33 cents US, also helped by a weakening American dollar.
The price of oil continued to find its footing in the bull market with the September crude contract up $1.43 at US$48.22 per barrel, while the October crude contract — which is currently trading at a larger volume — gained $1.37 to US$48.89 a barrel.
Markets analyst Todd Mattina said the value of the greenback has fallen in recent weeks amid a dovish environment, with traders not convinced that the U.S. Federal Reserve will hike interest rates any time soon.
Even Wednesday’s release of the latest minutes from the central bank’s July meeting didn’t pump up investor confidence.
Mattina, chief economist at Mackenzie Investments, noted that what’s obvious is that Fed chairwoman Janet Yellen doesn’t want to startle the economy with any major moves.
“What’s clear, given this longer-run framework, is that the pace of raising rates is going to be much more gradual and slow than previously thought,” he said.
“The Fed is looking for confirmation that inflation is really stabilizing, that we’re really seeing the labour market in a tight mode with wage gains gaining pace, and that global financial conditions remain easy before it pulls the trigger and hike rates.”
Although most are hung up over when the next hike will occur, what should really be a consideration is what schedule the Fed will want to be on for future hikes.
“The timing of the next rate hike is actually much less important to markets and to macro-economic performance than the expected number of rate hikes over the next two or three years,” said Mattina.
In the U.S., the Labor Department reported that the number of weekly applications for U.S. unemployment benefits slipped to a seasonally-adjusted 262,000, a possible sign that employers are hiring at a healthy pace.
The number of applications has stayed below 300,000 for 76 straight weeks, the longest streak since 1970.
In equity markets, Toronto’s S&P/TSX composite index dipped 1.92 points to 14,695.68.
In New York, the Dow Jones industrial average was up 23.76 points at 18,597.70, the broader S&P 500 composite index advanced 4.8 points to 2,187.02 and the Nasdaq composite gained 11.49 points to 5,240.15.
Other commodities also registered gains, with the December gold contract adding $8.40 to US$1,357.20 an ounce, September natural gas up five cents at US$2.67 per mmBTU and September copper contracts jumping two cents to US$2.17 a pound.
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