08/20/2012 08:36 EDT | Updated 10/20/2012 05:12 EDT

Canadian dollar up slightly amid mixed commodities, central bank worries

TORONTO - The Canadian dollar closed slightly higher Monday amid doubts about central bank moves to encourage economic growth and protect the euro currency.

The loonie, which has risen to its highest levels since early May in the past week, was up 0.07 of a cent at 101.17 cents US.

Commodity-based currencies such as the Canadian dollar have done well recently in the wake of a commitment by European Central Bank president Mario Draghi on Aug. 2 that the ECB would do whatever it takes to keep the eurozone monetary union intact.

That has been taken to mean that the ECB could ramp up its purchases of government bonds to lower the high interest yields faced by some governments if those countries first applied for help from the eurozone’s bailout fund.

However, Germany's central bank, the Bundesbank, has again stressed its skepticism toward those proposed purchases, despite signs Chancellor Angela Merkel is open to the ECB's plans. The German national central bank said in its monthly report Monday that such purchases would carry "substantial risks."

In another development, German news magazine der Spiegel reported that the ECB was contemplating setting concrete yield caps above which it would intervene to drive borrowing rates down.

However, the ECB said in a statement that it was "wrong" to speculate on the shape of future ECB interventions. It said its policies remained independent of governments and that it would act "strictly" within its mandate, which stresses preserving price stability as the first priority.

Oil prices lost early momentum and the September contract on the New York Mercantile Exchange dipped four cents to US$95.97 a barrel.

Copper prices gave back last week's three-cent gain, with the September contract in New York off five cents to US$3.37 a pound.

Copper fell as hopes dimmed of further stimulus from Chinese policy-makers.

A report over the weekend that property prices rose slightly in July discouraged investors who had been hoping for further big stimulus measures from the Chinese government.

China is the world’s biggest consumer of copper, viewed as an economic bellwether as it is used in so many industries.

December bullion climbed $3.60 to US$1,623 an ounce.