02/25/2015 08:54 EST | Updated 04/27/2015 05:59 EDT

Canadian dollar up sharply for second day on rising doubts about rate cut

TORONTO - The Canadian dollar continued to advance Wednesday amid increasing doubt that the Bank of Canada is set to deliver another interest rate cut.

The loonie gained 0.47 of a U.S. cent to 80.5 cents.

The loonie had advanced half of a U.S. cent on Tuesday following remarks from Bank of Canada governor Stephen Poloz that were interpreted as lessening chances of the bank following up a quarter point rate cut in January with another decrease as soon as next week.

Poloz said last month's surprise rate cut gives the Bank of Canada time to figure out how best to steer the country back toward stability as a recent collapse in oil prices ripples across the economy.

He added that the rate cut in January, 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.

Traders also monitored a second day of congressional testimony from Federal Reserve chairwoman Janet Yellen. She told the Senate finance committee on Tuesday that the U.S. central bank will continue to be patient in deciding when to hike interest rates. And she added that before rates go up, the central bank would drop this assurance. There has been much speculation the bank could move on raising rates as early as June.

Oil prices ticked $1.71 higher to US$50.99 a barrel following five days of losses even as the U.S. Department of Energy says American inventories rose 8.4 million barrels last week, about double the amount expected.

Metals were also higher with April gold up $4.20 to US$1,201.50 an ounce while March copper was up a cent at US$2.66 a pound.