TORONTO – The Canadian dollar soared to its biggest one-day gain in nearly four years Wednesday as volatile oil prices turned sharply higher and the Toronto stock market posted a triple-digit gain.
The loonie ended the day up 1.32 U.S. cents at 72.61 cents US. The increase was the most for the currency since rising 1.4 cents against the greenback in June 2012, according to a search of the Bank of Canada’s website.
Meanwhile, the Toronto Stock Exchange’s S&P/TSX composite index rose 150.76 points to close at 12,593.02, after losing 380 points or almost three per cent of its value over the two previous sessions.
Gareth Watson, director of investment management and research at Richardson GMP, said a bounce in commodity prices helped drive the TSX higher.
The March contract for benchmark crude oil shot up $2.40 to settle at US$32.28 a barrel, after falling $3.74 over the two previous days.
Oil prices have been on a roller-coaster of volatility since falling below US$30 earlier this month.
The price of crude has fallen from a high above $105 in June 2014 as oil producers including Russia and the OPEC cartel have kept their pumps wide open despite an increasing supply glut that shows little sign of easing.
Watson said recent reports of a potential deal between OPEC and Russia leading to both parties cutting production and boosting prices are difficult to believe.
“It’s just going to take some time for these commodity markets to settle out, and in the meantime you’re going to get these wild swings without rational reasons beyond speculation,” he said.
Although traders react to short-term indicators, demand for oil continues to grow, he noted.
“We’ve talked prices down below $30 a barrel, and now a lot of analysts are on the same page at around $20, $25 a barrel,” he said.
“Usually when analysts all start saying the same thing they’re all wrong.”
The big bounce in oil prices came despite a report from the U.S. Energy Information Administration showing American commercial crude inventories jumped by 7.8 million barrels last week, almost double the four-million-barrel gain forecast by analysts and now are at a record high nationwide.
In other commodities, March natural gas added 1.3 cents to end trading at US$2.038 per mmBtu and April gold rose $14.10 to US$1,141.30 a troy ounce.
New York markets were mixed, with the Dow Jones industrial average rising 183.12 points to end the day at 16,336.66, while the broader S&P 500 rose 9.5 points to 1,912.53 and the Nasdaq fell 12.71 points to 4,504.24.
In retail news, U.S. home improvement giant Lowe’s made a friendly $3.2 billion bid for Quebec-base Rona Inc. (TSX:RON) that has the support of Rona management and the Caisse de depot, which owns about 17 per cent of the company. Rona stock ended the day up $11.53 or nearly 98 per cent at $23.30 in massive trading of more than 19 million shares.