The Canadian dollar drifted higher late Thursday morning amid higher oil prices and gains on North American equity markets. The loonie was ahead 0.47 of a cent to 100.99 cents US. The dollar has been under heavy selling pressure on currency markets recently, down from 106 cents just over two weeks ago, reflecting the intense volatility on stock markets.

The currency has also declined amid the view that the Bank of Canada will likely hold off on raising interest rates further. Economists had expected the central bank to start raising rates later this year. But that forecast has changed in light of slowing economic conditions and a commitment from the U.S. Federal Reserve to keep interest rates near zero until mid-2013.

Traders also took in signs of a weakening economy.

Statistics Canada said merchandise exports fell 1.7 per cent in June while imports decreased 0.2 per cent. The agency said the country’s trade deficit with the world widened from $1 billion in May to $1.6 billion in June. Oil prices turned around with the September crude contract on the New York Mercantile Exchange up 85 cents to US$83.74, still down sharply from just under US$100 on July 22 on demand concerns.

Gold prices faded from Wednesday's latest record close, down $21.90 to US$1,762.40 an ounce on the Nymex. Copper prices reversed Wednesday's eight-cent decline, up 14 cents to US$4.03 a pound. Read More