TORONTO - The Canadian dollar advanced Thursday as the currency found support from strong gains in oil and metal prices amid hopes for a new European plan to shore up its banks.
The loonie was up 0.22 of a cent to 96.36 cents US on top of a 1.34-cent surge on Wednesday.
The currency had earlier gone as low as 95.42 cents US after the American dollar strengthened in the wake of a surprise decision by the European Central Bank to leave its key rate unchanged at 1.5 per cent.
Some economists had expected a rate cut because of signs of slowing growth in the eurozone economy.
Analysts think the bank decided to leave rates alone because the latest inflation figures were higher than expected and it typically likes to signal rate moves at least a month ahead of time. It hadn’t done so ahead of Thursday’s meeting.
Following the rate announcement, the tone on markets improved after the ECB announced that it would offer new emergency loans to banks on Thursday to help steady them through the government debt crisis.
The ECB will offer an unlimited amount of 12-month and 13-month loans to banks.
Traders are happy the move will shield banks from turbulence in borrowing markets. But analysts noted that the move doesn't do anything to keep banks from facing questions about their solvency should they have to deal with a disorderly debt default by Greece.
Renewed hope that European officials can contain the crisis pushed the December copper contract on the New York Mercantile Exchange up 14 cents to US$3.25 a pound. Prices were also boosted by signs of growing demand from China, the world’s biggest copper consumer.
Oil prices built on Wednesday's surge of US$4 on data showing an unexpected drop in U.S. inventories, which signalled demand may be improving. On Thursday, the November crude contract on the New York Mercantile Exchange was up was up $2.91 at US$82.59 a barrel.
Gold edged higher as the December contract on the Nymex advanced $11.60 to US$1,653.20 an ounce.