02/27/2015 08:35 EST | Updated 04/29/2015 05:59 EDT

Canadian dollar advances amid rising oil, soft American economic data

TORONTO - The Canadian dollar closed higher Friday but well off session highs amid some disappointing U.S. economic data.

The loonie rose 0.15 of a U.S. cent to 79.89 cents.

U.S. gross domestic product grew at an annual rate of 2.2 per cent in the October-December quarter, down from estimates of 2.6 per cent last month in a reflection of weaker business stockpiling and a larger trade deficit.

A bigger surprise was a glum reading on the manufacturing sector in the U.S. Midwest, which fell to a 5 1/2-year low in February. The Chicago Purchasing Managers Index fell to 45.8 from 59.4 in December, a reading indicating contraction.

Also, the University of Michigan's widely watched consumer sentiment index slipped to 95.4 from 98.1 in January.

Oil prices advanced after plunging almost $3 a barrel on Thursday to the lowest level in a month as data showed a continuing buildup of crude inventories in the United States that has left supplies at an 80-year high. On Friday, the April crude contract in New York closed up $1.59 at US$49.76 a barrel.

Also depressing oil and other commodity prices lately has been a steadily strengthening U.S. dollar. A stronger greenback makes commodities more expensive for holders of other currencies and depresses demand.

Metal prices were mixed Friday with April gold up $3 to US$1,213.10 an ounce while May copper was virtually flat at US$2.69 a pound.

Meanwhile, traders are looking ahead to the next interest rate announcement from the Bank of Canada on Wednesday.

There has been speculation that Canada's central bank would follow up its surprise quarter-point cut in January with another cut next week to support the economy against the negative effects of the collapse in oil prices.

But expectations for such a cut started to fade earlier this week following remarks from Bank of Canada governor Stephen Poloz, who said the January rate cut had given central bankers time to figure out how best to steer the country back toward stability as the effects of the plunge in crude prices ripples across the economy.