06/06/2013 08:31 EDT | Updated 08/06/2013 05:12 EDT

Canadian dollar surges as U.S. dollar sells off, commodities mixed

TORONTO - The Canadian dollar surged Thursday as a heavy selloff of the U.S. dollar lifted a variety of currencies.

The loonie closed up 0.81 of a cent to 97.47 cents US after earlier surging as high as 98.06 cents US.

"This is a broad-based U.S. dollar selloff," said Mark Chandler, head of Canada FIC Strategy at RBC Dominion Securities.

"It was a funny move to be honest, it happened all at once and it was broad-based, it was a number of currencies (up), particularly the yen against the U.S. dollar."

The greenback started to slide after European Central Bank president Mario Draghi indicated that the ECB has no plans right now to further stimulate the region, which is in the midst of a severe economic downturn.

The comment had the effect of attracting investors back into the euro currency.

The U.S. dollar has also been buffeted over the last couple of weeks after Fed chairman Ben Bernanke said May 22 that the Fed may decide to taper its bond purchase program within its next few policy meetings if the U.S. economy gains steam.

That program has involved the purchase of US$85 billion in bonds each month to keep rates low.

Earlier in the morning, new Bank of Canada governor Stephen Poloz indicated the central bank was in no hurry to raise rates from their ultra low levels.

Poloz, who took on the top job at the central bank this week, acknowledged during an appearance before the House of Commons finance committee that keeping rates low for a long period has a distorting impact on the economy, including triggering excessive borrowing. But he said the central bank must also consider the risk to the fragile economy of raising rates too soon.

The bank has kept its key rate at one per cent since September 2010. Chandler dismissed a suggestion Poloz's comments had anything to do with the loonie's move, calling it "a coincidence."

Traders also looked to the release Friday of May jobs data in Canada and the U.S.

Statistics Canada was expected to report Friday that the economy created about 20,000 jobs last month while the jobless rate slipped to 7.1 per cent from 7.2 per cent in April.

There was some positive news ahead of the release of the U.S. jobs report.

The number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 346,000, a level consistent with steady job growth. Weekly applications are a proxy for layoffs.

Economists have been forecasting that the American economy cranked out a total of 165,000 jobs last month. But that modest figure was called into doubt after payroll firm ADP reported that the U.S. private sector cranked out 135,000 jobs during May, less than the 165,000 that had been expected.

Also, the latest reading on the health of the U.S. service sector showed rising expansion but the data also showed that hiring slowed further in May to the lowest level since last July.

Commodities were mixed Thursday with July crude on the New York Mercantile Exchange ahead $1.02 to US$94.76 a barrel.

Prices advanced on Wednesday after the Energy Department said U.S. crude oil inventories shrank by 6.3 million barrels last week, much bigger than the one million drop that had been expected.

July copper stepped back five cents to US$3.32 a pound while August bullion gained $17.30 to US$1,415.80 an ounce.