Canadian dollar makes slight gain despite weaker crude oil price

TORONTO – The Canadian dollar nudged slightly higher on Wednesday as oil prices hit a six-week low, and traders held back from making any major moves on stock markets.

The loonie was up 0.01 of a cent to 102.62 cents US.

October crude on the New York Mercantile Exchange moved down $3.31 to US$91.98 a barrel, touching a six-week low.

The U.S. Energy Information Administration’s weekly report said that crude inventories rose three times more than analysts had expected last week. Crude supplies grew by 8.5 million barrels to 367.6 million barrels. That’s 8.4 per cent higher than at the same time last year.

Gold stocks rose 1.1 per cent, while the December bullion increased 50 cents to closing the session at US$1,771.70 an ounce. December copper was up 2.7 cents to US$3.81 a pound.

In Canada, the Teranet–National Bank National Composite House Price Index showed that prices rose a meagre 0.2 per cent in August from the month prior. That marks the weakest month-over-month increase in 12 years.

The somewhat downbeat data ran against a report on U.S. home sales from the National Association of Realtors that said they jumped to the highest level in more than two years in August. Sales rose 7.8 per cent to a seasonally-adjusted annual rate of 4.82 million, the most since May 2010.

The U.S. Commerce Department said builders started construction on more homes in August, driven by the fastest pace of single-family home construction in more than two years.

“August starts and permit numbers were so-so, but the broader trends suggest that the U.S. housing recovery is solidifying,” said BMO Capital Markets senior economist Robert Kavcic in a note.

Earlier, the Bank of Japan said it was increasing its asset purchasing fund to 55 trillion yen (US$700 billion) from 45 trillion yen to counter the strength of the Japanese currency. A strong yen makes it more difficult for Japanese companies to compete in international markets.

The Bank of Japan’s move comes days after the U.S. Federal Reserve revealed it will purchase an average of $40 billion a month in mortgage-backed securities until the economy shows significant improvement.