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The Royal Canadian Mint unveiled the 2012 lucky loonie coin in Calgary, Alta., Thursday, July 19, 2012. (Jeff McIntosh/THE CANADIAN PRESS)
The Royal Canadian Mint unveiled the 2012 lucky loonie coin in Calgary, Alta., Thursday, July 19, 2012. (Jeff McIntosh/THE CANADIAN PRESS)

Canadian dollar rises amid rising oil Add to ...

The Canadian dollar closed higher against the U.S. currency Tuesday as oil prices advanced and traders weighed the chances of U.S. Federal Reserve chairman Ben Bernanke dropping hints later this week about another round of economic stimulus.

The currency rose 0.31 of a cent to $1.0124 (U.S.).

Mr. Bernanke delivers a key speech at the Fed’s annual retreat at Jackson Hole, Wyo., on Friday. It is hoped his remarks will signal that the central bank is ready to move to support the economic recovery when it makes its next announcement on interest rates Sept. 13.

Such stimulus could take the form of another round of quantitative easing, which would involve the Fed printing more money to buy bonds.

Hopes for stimulus also rose after the Wall Street Journal reported Friday that Mr. Bernanke had written a Republican lawmaker saying there was room for the central bank to do more to help the recovery.

But analysts have cautioned that the Fed may not move on further stimulus as the U.S. economy has shown signs of improvement over the last month, including higher-than-expected job creation in July, rising retail sales and positive housing reports.

Meanwhile, European Central Bank head Mario Draghi has called off his trip to the Fed conference, due to a heavy workload as top ECB officials shape their plans to intervene in bond markets and lower borrowing costs for indebted governments.

The ECB plan remains subject to debate ahead of the bank’s monthly meeting on Sept. 6, when it is expected to announce more details. Germany’s central bank is still opposed to the plan to buy government bonds.

Meanwhile, the October crude contract on the New York Mercantile Exchange rose 86 cents to $96.33 a barrel as traders waited to see how much — and for how long — Hurricane Isaac’s powerful winds and driving rains will affect oil production and refinery operations in the Gulf coast region.

Prices also rose following an intense fire at the Amuay refinery in western Venezuela.

Other commodities headed lower with September copper off 1 cent at $3.46 a pound, while December gold declined $5.90 to $1,669.70 an ounce.

Traders also took in mixed economic data from the U.S.

The Conference Board said that its Consumer Confidence Index fell to 60.6 from a revised 65.4 in July. Economists had expected a reading of 66. The index now stands at the lowest point since November, 2011, when the reading was at 55.2.

The indicator is widely watched because consumer spending, including major purchases like health care, accounts for 70 per cent of U.S. economic activity.

The news was better on the housing front as Standard & Poor’s/Case-Shiller home price index showed prices rose in June in all of the 20 cities tracked. The measure of national prices rose 2.3 per cent in June from May, while home prices jumped nearly seven per cent in the April-June quarter from the previous quarter.

Meanwhile, Spain saw some good news from a bond auction. Spain’s Treasury sold nearly €4-billion ($5-billion) in short-term debt auctions that saw investors accepting much lower interest rates, reflecting easing concern that the country will need a full-blown bailout.

The Treasury sold €1.67-billion in three-month bills at an average interest rate of 0.95 per cent, down from 2.43 per cent in the last such auction July 24. And it sold €1.93-billion in six-month bills on a yield of 2.03 per cent, down from 3.69 per cent.

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