Canadian Dollar Climbs On Higher Oil Prices

The Canadian dollar advanced against its most major counterparts in the European session on Wednesday, as oil prices rose following an industry data showing a drop in U.S. inventories last week and on worries that tensions in the Middle East could disrupt crude output.

Crude for December delivery rose $0.19 to $52.30 per barrel.

Data from the American Petroleum Institute showed late Tuesday that U.S. crude inventories fell by 7.1 million barrels to 461.4 million barrels in the week ending October 13.

Gasoline inventories rose 1.94 million barrels and distillate inventories were up by 1.644 million barrels.

Investors await official inventory data from the Energy Information Administration, due at 10:30 am ET.

Iraqi military forces took control of the city of Kirkuk from Kurdish fighters early this week, following weeks of political crisis after Kurdish independence referendum. Investors are worried that fighting could affect supplies. The currency rose against its major rivals in the Asian session, with the exception of the greenback. The loonie climbed to a 6-day high of 90.12 against the Japanese yen, compared to 89.58 hit late New York Tuesday. If the loonie rises further, 91.00 is possibly seen as its next resistance level.

Bank of Japan needs to maintain its monetary easing in the current framework, according to the board member Makoto Sakurai.

Sakurai said price movements are weak and there is a long way to go to achieve the inflation target of 2 percent. The bank should take this point seriously, he noted.

The loonie that closed Tuesday's deals at 0.9821 against the aussie firmed to a 5-day high of 0.9796. On the upside, the loonie is likely to target resistance around the 0.97 mark.

The loonie climbed to a 9-day high of 1.4694 against the euro early in the session and held steady thereafter. The pair finished Tuesday's trading at 1.4730.

European Central Bank President Mario Draghi said that accommodative monetary policy opens window of opportunity to take structural reforms.

He observed that crisis confirmed that more flexible economies are more resilient, especially for countries that are part of a monetary union.

On the flip side, the loonie slipped to 1.2534 against the greenback from an early 4-day high of 1.2488. The next possible support for the loonie is seen around the 1.27 region.

Looking ahead, U.S. building permits and housing starts for September as well as Canada manufacturing sales for August are due in the New York session.