The Canadian dollar edged higher against its major rivals on Thursday morning in New York as crude oil rebounded and climbed above $50 a barrel amid concerns that energy demand will improve and confidence in the struggling economy starts to build. The petro-dependent Canadian currency edged up to multi-day highs against the greenback and the yen.
Light sweet crude for May delivery rallied to $51.91 per barrel, up $3.52 for the session. Prices touched as high as $52.06 in the opening hour of trading.
Investors also mulled a report showing that the U.S. commercial crude oil inventories increased 2.8 million barrels from the previous week. Experts were looking for a build of about 3 million barrels.
Commodities and the dollar are rallying in anticipation of additional stimulus measures likely to be discussed at the G20 meeting today in London.
Reversing yesterday's downtrend, the Canadian currency advanced to a 6-day high of 1.2381 against the US dollar by 11:30 am ET. The loonie thus recovered from Wednesday's 2-week low against the buck. The pair that closed yesterday's deals at 1.2602 is currently trading near 1.2388.
Traders paid little attention to the US Labor Department report on initial jobless claims in the week ended March 28th showing that initial jobless claims rose to 669,000 from the previous week's revised figure of 657,000. Economists had expected jobless claims to edge down to 650,000 from the 652,000 originally reported for the previous week.
Meanwhile, new orders for manufactured goods increased by more than expected in February. According to a report released by the Commerce Department, factory orders rose 1.8 percent in February following a revised 3.5 percent decrease in January. Economists had been expecting orders to rise by 1.5 percent compared to the 1.9 percent decrease originally reported for the previous month. The rebound in February marked the first increase in factory orders in seven months.
Against the Japanese yen, the Canadian dollar climbed to a 9-day high of 80.55 by 11:30 am ET. This may be compared to yesterday's close of 78.23. The loonie-yen pair is presently trading at 80.52 with 83 seen as the next target level.
In economic news, the monetary base in Japan was up 6.9 percent on year in March, the Bank of Japan said today, standing at 94.46 trillion yen. That's up from 93.65 trillion yen in February, which saw a 6.4 percent annual increase. Seasonally adjusted, the monetary base was up 5.6 percent on month at 94.3 trillion yen.
The Canadian dollar advanced to 1.6634 against the European common currency by 11:30 am ET from previous low of 1.6819 hit by 8:45 am. The euro-loonie pair that closed yesterday's deals at 1.6696 is currently trading near 1.666.
The euro spiked higher earlier in the session after the European Central Bank decided to trim its key interest rate by 25 basis points to a new low of 1.25 percent. In its meeting held in Frankfurt, Germany, the Governing Council of the central bank also reduced the interest rate on marginal lending facility and that on the deposit facility to 2.25% and 0.25%, respectively.
In its post-rate comments, ECB President Jean-Claude Trichet signaled that there is still room to cut the benchmark interest rate for Euro-zone and the world economy is undergoing a severe downturn.
Before the rate decision, investors pondered over a report in the European session showing that the French producer price index declined 0.6% month-on-month in February following a 2% fall in January.
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