Loonies are displayed over the U.S. dollar in this Jan. 30, 2015 photo.Paul Chiasson/The Canadian Press
The Canadian dollar fell heavily Wednesday as an impressive string of gains in oil prices stalled amid signs of growing crude inventories in the United States.
The loonie tumbled 1.08 of a cent to 79.59 cents (U.S.) following a run-up of two cents over the previous two sessions.
The jump in the Canadian currency paralleled a string of gains in oil prices that saw the March contract in New York jump four per cent over the previous four trading days.
Prices started heading higher late last week following a string of cutbacks in oil-sector capital spending — and in some production cuts — that raised hopes for relief from a huge demand/supply imbalance.
But crude moved down $4.60 to $48.45 a barrel after data released Wednesday by the Department of Energy showed a bigger than expected increase in U.S. inventories last week. They rose by 6.3 million barrels, much higher than the 2.8-million-barrel increase that analysts had expected.
Crude prices have plunged 50 per cent since last summer amid a glut of supply on world markets.
Elsewhere on the commodity markets, April bullion climbed $4.20 to US$1,264.50 an ounce while March copper was ahead one cent at US$2.59 a pound, adding to a nine-cent surge on Tuesday.
In economic news, China says it is reduction the minimum level of reserves its banks are required to hold by at least 0.5 per cent in a new move to reverse a deepening economic slowdown. Analysts expected new stimulus measures after last year's economic growth slumped to a 24-year low of 7.4 per cent.
Meanwhile, there was positive news on the employment front two days before the release of the U.S. government's jobs report for January. Payroll firm ADP reported that the American private sector created 213,000 jobs last month. Overall, economists are expecting the government data to show the economy created 233,000 jobs in January.
Canadian jobs data for January is also coming out on Friday. Economists expect Statistics Canada to report that about 5,000 positions were created last month.
Other data showed greater expansion of the U.S. service sector last month. The Institute for Supply Management's non-manufacturing index rose to 56.7 from 56.5.