TORONTO - The Canadian dollar closed higher Wednesday as the Bank of Canada announced it would keep its key rate unchanged at 0.75 per cent.
The loonie climbed 0.48 of a U.S. cent to 80.54 cents.
The move came as no surprise to analysts. They had generally expected the central bank to hold the line on interest rates following a surprise quarter-point cut in January.
"The last rate cut was on the back of the collapse in oil prices and its impact on growth and inflation," said Camilla Sutton, chief FX strategist and managing director at Scotiabank Global Banking and Markets.
"Considering the recent stability of oil prices, combined with stronger than expected inflation and GDP releases, it would be a struggle to justify a second rate cut."
In other economic news, there was a positive assessment of the economy in the U.S. Federal Reserve's latest regional snapshot. The Fed says the economy was growing at a moderate pace through mid-February despite severe winter weather.
U.S. payroll firm ADP reported that the American private sector created 212,000 jobs last month, slightly below expectations of 219,000 jobs. The data was released two days ahead of the U.S. government's February report on job growth. Economists generally expect the economy to have created a total of 235,000 jobs last month.
Investors also digested a positive reading on the American non-manufacturing sector from the Institute for Supply Management. Its February index rose to 56.9 last month from 56.7 in January.
In China, Premier Li Keqiang is expected to lower this year's official growth target to seven per cent from last year's 7.5 per cent when he makes an annual appearance before the national legislature on Thursday to announce government economic plans.
The lower target is part of the ruling Communist party's effort to reduce China's reliance on trade and investment and encourage more self-sustaining growth based on domestic consumption and service industries.
On the commodity markets, crude prices moved into the negative column after the U.S. Energy Information Administration reported a jump in crude supplies that was much more than what analysts expected. Crude inventories rose by 10.3 million barrels last week, far higher than the expected advance of 3.7 million barrels.
The April crude contract in New York was up $1.01 to US$51.53 a barrel.
Metals were mixed with April gold off $3.50 to US$1,200.90 an ounnce while May copper was unchanged at US$2.66 a pound.