TORONTO – The Canadian dollar closed higher Wednesday ahead of comments by the two top officials at the Bank of Canada to a parliamentary committee in Ottawa.
The loonie was up 0.22 of a cent at 95.72 cents US as traders also looked at the latest U.S. retail sales and housing data and the minutes of the October meeting of the U.S. Federal Reserve.
Bank of Canada governor Stephen Poloz and senior deputy governor Tiff Macklem were appearing before the Senate standing committee on banking, trade and commerce.
In remarks released after markets closed, Poloz said he disagreed with an assessment Tuesday by the Paris-based OECD that the Bank of Canada would have to start raising interests rates by the end of next year.
The central banker said that that while he respects the view of the OECD, different forecasting organizations can use different approaches to predict future economic growth.
Poloz said the Bank of Canada’s thinking on the issue is based on its own view of slack in the Canadian economy and the fact that inflation, at 1.1 per cent, is currently well below where he would like it to be.
Meanwhile, the U.S. central bank released minutes from its latest meeting late last month and they failed to provide any increased reassurances that the Fed won’t soon start to withdraw economic stimulus.
The central bank’s monthly purchase of US$85 billion of bonds have kept long-term rates low and pushed investors into riskier but potentially higher yielding assets such as stocks. The quantitative easing has underpinned substantial gains on many markets this year but left investors on edge for signs the central bank will start reducing its asset purchases.
Janet Yellen, who is slated to become the next Fed chairman, has already expressed strong support for low interest rate and bond buying policies aimed at stimulating U.S. growth.
The U.S. Commerce Department says retail sales rose 0.4 per cent in October, impacted by a steep drop in gas prices. Excluding sales at gas stations, retail spending increased an even stronger 0.5 per cent. The consensus had called for October U.S. retail sales to have risen by 0.1 per cent following a flat showing in September.
U.S. home sales data for October came in a bit below expectations. Home resales fell 3.2 per cent last month from September to a seasonally adjusted annual pace of 5.12 million versus expectations of 5.16 million because of higher mortgage rates and the U.S. government’s fiscal impasse.
On the commodity markets, oil prices lost early gains amid conflicting inventory data. The U.S. Energy Information Administration said that crude supplies rose 400,000 barrels last week. Analysts polled by Platts were looking for a decline of 500,000 barrels, though Prestige Economics had forecast a 1.4 million-barrel increase.
December crude dipped one cent to US$93.83 while the January contract was off four cents to US$93.85 a barrel
December copper was unchanged at US$3.16 a pound while December bullion declined $15.50 to US$1,258 an ounce.