TORONTO – The Canadian dollar closed higher Wednesday as minutes from the U.S. Federal Reserve’s latest meeting showed the central bank is in no rush to raise interest rates.
The loonie shed early declines as the greenback weakened after the mid-afternoon release of the Fed minutes. The Canadian dollar closed up 0.54 of a cent to 90.06 cents US.
The minutes showed that U.S. central bank officials agreed that they would begin raising interest rates only when measures of the economy’s health and inflation signalled the time was right.
The minutes from last month’s meeting also showed that they have moved away from linking any rate change to any specific period.
The Canadian dollar, a commodity-sensitive currency, had earlier felt the weight of lower prices for oil, which hit fresh 18-month lows amid lower growth forecasts and lower demand.
Oil fell heavily for a second day, with the November contract down $1.54 to US$87.31 in the wake of a double-dose of weak German industrial data released Tuesday that raised concerns that Europe’s biggest economy may not rebound as expected in the third quarter.
Also, the International Monetary Fund trimmed its outlook for global economic growth this year and next, mostly because of weaker expansions in Japan, Latin America and Europe.
Those concerns translated into questions about demand for crude, particularly after data showed rising American inventories. The U.S. Energy Information Agency said Wednesday that U.S. oil inventories rose by 5.1 million barrels last week.
Analysts had expected supplies to rise by 2.1 million barrels.
Elsewhere on commodity markets, December copper was unchanged at US$3 a pound and December gold dropped $6.40 to US$1,206 an ounce.
Traders also digested data showed housing starts increased modestly during September.
Canada Mortgage and Housing Corp. reported that starts came in at an annualized pace of 197,343 units, up from 196,283 in August, due to an increase in multi-unit homes including condominiums.
Bob Dugan, CMHC’s chief economist, said that “the currently elevated level of condominium units under construction supports our view that condominium starts should trend lower over the coming months.”
On Friday, Statistics Canada releases the jobs report for September. Economists expect that the economy cranked out about 15,000 jobs.