The Canadian dollar strengthened against other major currencies in the Asian session on Wednesday, as the crude oil prices moved higher on expectations the Chinese government will announce additional stimulus revive growth in the world's second largest economy.

There is optimism over solid U.S. fuel demand after separate set of data released the previous day showed new home sales rebounded, and core capital goods orders increased in November.

West Texas Intermediate crude oil futures for February closed higher by $0.86 or about 1.25% at $70.10 a barrel.

Brent crude futures settled higher by $0.95 or about 1.3% at $73.58 a barrel.

China's Finance Ministry announced on Tuesday that the government will increase public spending with a greater focus on promoting domestic demand growth next year.

Possibility of supply disruptions due to persisting geopolitical tensions, and the passage of a stop-gap spending bill by the U.S. Senate to avert a government shutdown also supported oil prices.

Kazakhstan's decision to shelve its plans to raise oil production by 190,000 bpd next year contributed as well to oil's upside. In the Asian trading today, the Canadian dollar rose to more than a 4-1/2-month high of 0.8943 against the Australian dollar, from yesterday's closing value of 0.8955. The loonie may test resistance near the 0.87 region.

Against the U.S. dollar, the loonie advanced to 1.4348 from yesterday's closing value of 1.4360. On the upside, 1.42 is seen as the next resistance level for the loonie.

Against the euro and the yen, the loonie edged up to 1.4932 and 109.58 from early lows of 1.4965 and 109.42, respectively. The next possible upside target for the loonie is seen around 1.48 against the euro and 111.00 against the yen.

Most of the markets are off for the Christmas Day holiday.

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