Canadian dollar rises as markets stabilize

The Canadian dollar was moving higher on Thursday, but a poll of currency specialists predicts more pressure ahead for the loonie.

The loonie rose close to halfa cent to 75.80 cents US at the close of trading.

Oil got a boost on Thursday after Saudi Aramco cut the official selling price of its crude for the U.S. market. The West Texas Intermediate contract was up 65 cents at $46.90 US a barrel and Brent, the most important international contract traded in London, rose 32 cents to $50.82.

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Oil took a steep slide earlier this week amid worries about China's slowing growth and has been volatile all summer.

Today investors have been encouraged by positive economic news out of the United States, including strong trade data and news that the service sector, which is the bulk of the U.S. economy, is expanding at a healthy pace.

Most of the U.S. service sector is "less exposed to weakening inforeign demand, and more exposed to what increasingly appears to bestrengthening domestic demand," says Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

Stocks also moved higher ahead of the release of data about jobs in the U.S. and Canada on Friday.

The Dow climbed 23points to 16,374. Both Toronto and New York markets are recovering from a steep downturn on Monday and throughout the final weeks of August.

With Chinese markets closed for two days for a public holiday, there is less volatility in stock markets globally.

More trouble ahead for loonie

A Reuters poll of currency analysts indicates further weakness ahead for the Canadian dollar. The Canadian dollar is down 14 per cent since the beginning of the year, hurt by volatile oil prices and a moribund economy.

Canada's central bank has cut interest rates twice this year, hoping to reverse some of the effects of low oil. Currency strategists say interest rate decisions over the next two weeks will put more pressure on the loonie.

Next week the Bank of Canada will announce an interest rate decision, and the Fed will decide the following week.

And while Canada is likely to cut rates if there is any change, the U.S. central bank may start its plan to raise them.

A Reuters poll of nearly 40 foreign exchange strategists forecast it would take $1.33 Canadian to buy a U.S. dollar in the next three to six months.