02/24/2015 08:39 EST | Updated 04/26/2015 05:59 EDT

Canadian dollar closes higher, traders weigh chances of further rate cuts

TORONTO - The Canadian dollar closed higher Tuesday amid doubts about whether another interest rate cut by the Bank of Canada is in the cards.

The loonie was up 0.51 of a U.S. cent at 80.03 cents as Bank of Canada governor Stephen Poloz told an audience at Western University in London, Ont., that the impact of lower oil prices and how much they will hurt Canada's economy remains unclear.

But he said last month's surprise rate cut gives the Bank of Canada time to figure out how best to steer the economy toward stability.

"This dampened expectations of another rate cut at next week's Bank of Canada meeting," said Colin Cieszynski, chief strategist at CMC Markets Canada.

"Coming off as less dovish than hoped, today's speech ignited a rally in the Canadian dollar."

Poloz added that the quarter-point rate cut, which reduced the central bank's overnight rate to 0.75 per cent, has given policy-makers more confidence the economy should be back on a more sound footing by the end of next year, rather than some time in 2017.

There has been much speculation the central bank will cut rates again next week.

Federal Reserve chairwoman Janet Yellen reassured markets that the U.S. central bank would continue to be patient in deciding when to hike interest rates.

Yellen told the Senate finance committee that before rates go up, the Fed would drop that assurance of patience.

There has been much speculation the Fed could move on raising rates as early as June.

Oil prices fell for a fifth consecutive trading day, triggered by data last week that show significant buildups in U.S. crude inventories to 80-year highs. On Tuesday, the April crude contract lost 17 cents to US$49.28 a barrel.

Metals were mixed with March copper up six cents at US$2.66 a pound while April gold faded $3.50 to US$1,197.30 an ounce.

There was also positive news for the eurozone. Greece's creditors in the 19-country currency union approved a list of reforms that Athens proposed to get a four-month extension to its bailout, which should keep the country afloat over the coming months.