Canadian dollar advances on stimulus hopes, rising commodity prices

TORONTO – The Canadian dollar advanced Thursday with a positive mood on markets underpinned by hopes for more stimulus from central banks.

The loonie rose 0.3 of a cent to 99.24 cents US.

U.S. Federal Reserve Chairman Ben Bernanke wrapped up two days of testimony before Congress on Wednesday. And while he did not indicate that another round of stimulus was imminent, his comments led investors to believe further action remained an option.

The Fed has already completed two programs of asset purchases, which have the effect of increasing the supply of money, much which ends up in financial markets.

The currency was also supported by commodity prices which advanced on hopes for higher demand. The August crude contract on the New York Mercantile Exchange was up $1.35 to US$91.22 a barrel.

Copper, viewed as an economic bellwether as it is used in so many industries, ran ahead six cents to US$3.54 a pound.

Bullion prices also advanced, up $15.60 to US$2,586.40 an ounce.

Meanwhile, a Spanish auction earlier did little to alleviate concerns over the country ahead of a Friday conference call between eurozone finance ministers.

The Treasury sold €2.96 billion in bonds maturing in 2014, 2017 and 2019. Demand was roughly two times the amount on offer for each issue. But the interest rate on the five-year debt rose sharply to 6.46 per cent, from 5.54 per cent at the last such auction on July 5. The Treasury provided no comparable rates for the other maturities.

Eurozone finance ministers are expected to give final approval on Friday for a bailout package of up to €100 billion for Spain’s troubled banks. The banks’ bailout was first announced in June, but it has failed to ease worries about Spain’s public finances.