TORONTO – The Canadian dollar found some strength Wednesday amid a quiet, holiday shortened trading day despite downward pressure from lower commodities.
The loonie gained 0.06 of a cent to 86.04 cents US.
Oil prices seem to have stabilized over the last few days after plunging in recent weeks due to falling demand and a production glut. At its height this past summer, crude prices reached US$107 a barrel, but have now levelled out around the US$55-a-barrel mark, despite several attempts to move higher.
On Wednesday, the January crude oil contract was down $1.28 to US$55.84 a barrel.
Other commodities were also lower, with the February gold bullion contract falling $4.50 to US$1,173.50 an ounce, while March copper was down a penny at US$2.85 a pound.
Camilla Sutton, chief FX strategist at Scotiabank, said the loonie looks like it will continue to stay soft in the near term amid signs that the U.S. economy is continuing to improve and the growing likelihood that the U.S. Federal Reserve will hike interest rates in mid-2015.
A spate of positive economic data this week from both Canada and the U.S. helped lift the U.S. dollar ahead of the Christmas break.
The Labor Department reported Wednesday that the number of Americans applying for unemployment benefits has reached its lowest level in seven weeks. Applications for unemployment benefits dropped 9,000 last week to a seasonally adjusted 280,000. The four-week average, a less volatile measure, declined 8,500 to 290,250. That average has plunged 16 per cent in the past 12 months.
On Tuesday, the U.S. Commerce Department revised its latest gross domestic product figures for the third quarter. The department said the economy expanded by five per cent, the fastest in 11 years, helped by consumer spending. It had previously reported growth of 3.9 per cent for the quarter. Economists had anticipated a revision to 4.3 per cent.
In Canada, GDP grew by 0.3 per cent in October, beating the consensus expectations of economists, who had predicted growth of 0.1 per cent for the month. The economy had grown by 0.4 per cent in September. Statistics Canada attributed much of the growth to oil and gas extraction, mining and manufacturing.
Overseas, Russia’s central bank has made another move to shore up the battered ruble, offering hard currency loans to companies and banks to help them service their debts. The bank says that borrowers can put their debt obligations as collateral against loans.
The ruble has lost about half of its value this year, dragged down by western sanctions over its dispute with Ukraine and by sinking prices for oil, the country’s main source of revenue.
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