Higher oil prices boost loonie at midday

Category dfpxafyi

TORONTO — The Canadian dollar was little changed late morning Thursday amid higher oil prices and investor sentiment buoyed by moves by three major central banks to stimulate their economies.The commodity-sensitive loonie inched up 0.02 of a cent to 98.72 cents US.The Chinese central bank cut its benchmark lending rate by 0.31 of a point to six per cent. It was the second time within a month that the bank has cut interest rates in an attempt to stimulate China’s rapidly slowing economy.The European Central Bank weighed in with a quarter point cut in its key rate to an all-time low of 0.75 per cent.The ECB also cut its overnight deposit rate — what it pays banks for depositing their money with the ECB overnight — to zero. That is meant to encourage banks to invest their money in the economy rather than stash it with the ECB.The Bank of England announced earlier it is injecting another 50 billion pounds into the ailing British economy, which has been officially in recession. The move by the Bank of England’s monetary policy committee involves the central bank purchasing government bonds from banks. It was widely-anticipated and raises the amount being pumped into the British economy since March 2009 to 375 billion pounds. It is the first stimulus since February.However, some of the shine on the central bank moves was tempered after ECB president Mario Draghi warned that further risks to euro-area growth have materialized and indications for the second quarter point to weakened growth and heightened uncertainty.Meanwhile, payroll firm ADP reported that the U.S. private sector created 176,000 jobs in June. This news was particularly welcome, coming a day before the release of the U.S. non-farm payrolls report. Expectations are modest with economists forecasting the economy only cranked out about 90,000 jobs last month.Other data showed planned layoffs in the U.S. fell 39 per cent to a 13-month low in June. Outplacement firm Challenger Gray & Christmas said the June total is 9.4 per cent lower than the number of cuts a year ago and is the lowest monthly total since May 2011Traders also looked ahead to the release of Canadian jobs data Friday. It is expected the economy created about 16,000 jobs last month.Oil prices shook off early losses after data showed U.S. crude inventories fell by 4.3 million barrels last week, raising hopes for higher demand.The August crude contract on the New York Mercantile Exchange gained 22 cents to US$87.88 a barrel. Oil is still up about US$10 from last Thursday, partly over increased tensions with Iran.But traders have also been hopeful that central bank action to boost economic growth, along with signs late last week that eurozone leaders are making progress in dealing with the region’s debt crisis, will boost demand.September copper lost five cents to US$3.49 a pound, but prices are still up about 4.5 per cent from last Thursday.Gold prices relaxed $12.50 to US$1,609.30 an ounce.

Leave a Reply

Your email address will not be published. Required fields are marked *