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TORONTO: The Canadian dollar was up slightly Monday, receiving a lift from higher commodity prices even as the U.S. dollar strengthened ahead of an announcement from the U.S. Federal Reserve on new stimulus measures.

The loonie was up 0.62 of a cent to 98.64 cents US at the start of what is likely to be a volatile week with the U.S. midterm elections on Tuesday, the release of the Fed announcement on Wednesday and the October non-farm payrolls report on Friday.

``The week ahead is packed with event risk globally, but Wednesday's (Fed) outcome is overshadowing everything,'' observed Adam Cole, Global Head, FX Strategy for RBC Capital Markets in London.

It is widely expected the Fed policy meeting, which ends Wednesday, will announce a Treasury bond buying program, known as quantitative easing, to inject more liquidity into the economy.

Questions about the size and duration of such a program have pressured the U.S. dollar recently, since the stimulus measure involves the Fed printing vast quantities of dollars.

The U.S. dollar picked up after the Institute for Supply Management said its manufacturing index rose in October, indicating an acceleration of growth in the sector. Economists polled by Thomson Reuters had forecast the pace of expansion would slow last month.

Commodity prices rose amid a report showing that Chinese manufacturing accelerated in October, raising hopes for higher demand for oil and metals.

``Oil, copper all had big moves higher, there's rumours that China is aggressively buying and that sent the commodities higher and that dragged the Canadian dollar higher,'' said Steve Butler, director of forex trading at Scotia Capital.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 54.7 in October from 53.8 September and 51.7 in August. Monthly readings have stayed above 50, the benchmark for expansion, for 20 straight months, it said.

A competing index, the HSBC China Manufacturing PMI _ a seasonally adjusted index designed to measure the performance of the manufacturing economy _ rose to a six month high of 54.8 in October from 52.9 in September.

The solid Chinese manufacturing data pushed the December crude contract on the New York Mercantile Exchange up $1.96 to US$83.39 a barrel.

The base metals segment rose 1.36 per cent with December copper contract on the Nymex ahead six cents to US$3.80 a pound.

The December bullion contract moved down $4.90 to US$1,352.70 an ounce.

BHP Billiton's hostile takeover bid for Potash Corp. of Saskatchewan (TSX:POT) also had an effect on the dollar.

British media reports said that BHP could be ready to sweeten its hostile US$38.6 billion takeover bid for the fertilizer giant.

``Markets are also wondering about the whole BHP Potash deal as well,'' added Butler.

``We've seen lots of news about that, and there's the latest talk that perhaps BHP may step up the bid a little bit. That's also giving Canada a more optimistic light today.''

That's because a large takeover financed with Canadian dollars tends to boost demand for the loonie.