The Canadian dollar closed slightly higher Wednesday as the U.S. Federal Reserve announced that it will carry on its economic stimulus measures for some time to come - even a raft of negative economic data raised demand concerns and depressed commodity prices.
The loonie rose 0.06 of a cent to 99.2 cents U.S.
The Fed announcement means interest rates will stay near zero until the jobless rate hits 6.5 per cent from its current level of 7.6 per cent.
And other stimulus in the form of spending $85 billion (U.S.) a month on bonds to keep long-term rates low and encourage lending will stay place until the labour market improves substantially.
That could be a ways off, as payroll firm ADP released employment data that indicated another month of weak job creation. ADP said private sector job creation came in at 119,000 during April, much lower than expectations of 150,000.
The U.S. government’s employment report for last month is expected Friday.
Commodity prices were lower after data showed a slowdown in China’s manufacturing growth.
The China Federation of Logistics and Purchasing, an industry group, released data Wednesday showing that manufacturing grew at a slower pace in April and that export orders had been declining steadily. The federation’s purchasing managers’ index fell to 50.6 in April from 50.9 in March.
Other data showed declining expansion in the American manufacturing sector. The Institute for Supply Management’s index stood at 50.7 in April, down from 51.3 in March.
And construction spending fell 1.7 per cent in March after rising 1.5 per cent in February.
The June crude contract on the New York Mercantile Exchange lost $2.43 to US$91.03 a barrel.
Prices were further depressed after the U.S. Energy Information Administration reported a jump in last week’s crude supplies that was more than four times higher than expected, rising last week by 6.7 million barrels.
July copper fell 11 cents to $3.08 U.S. a pound and June gold bullion in New York dropped $25.90 to $1,446.20 U.S. an ounce.
Traders also looked ahead to the European Central Bank’s interest rate announcement on Thursday.
Market expectations have risen in recent days that the ECB will cut its key rate from its current record low of 0.75 per cent because of fears that the euro area’s economy isn’t recovering.
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