Photo: The Canadian Press. All rights reserved.

An American dollar bill and Canadian coins, are seen on Nov. 8 2007 in Quebec City. THE CANADIAN PRESS/Jacques Boissinot

The Canadian dollar inched higher on Wednesday morning on the heels of Japan's central bank easing its monetary policy to push for more growth in its economy.

The loonie was up 0.3 of a cent to 102.64 cents US before stock markets opened.

Earlier, the Bank of Japan said it was increasing its asset purchasing fund to 55 trillion yen (US$700 billion) from 45 trillion yen to counter the strength of the Japanese currency. A strong yen makes it more difficult for Japanese companies to compete in international markets.

The Bank of Japan's move comes days after the U.S. Federal Reserve revealed it will purchase an average of $40 billion a month in mortgage-backed securities until the economy shows significant improvement.

Meanwhile, a report from the U.S. Commerce Department said that builders started construction on more homes in August, driven by the fastest pace of single-family home construction in more than two years.

Construction of new homes and apartments rose 2.3 per cent to a seasonally adjusted annual rate of 750,000 last month.