Photo: The Canadian Press. All rights reserved.

Canadian dollars, or loonies are shown with U.S dollars on April 6, 2010 in Montreal. THE CANADIAN PRESS/Ryan Remiorz

The Canadian dollar moved higher Thursday after a top Bank of Canada official suggested that rising interest rates are still a medium-term possibility.

The loonie rose 0.79 of a cent to 101.99 cents US, with a better than expected reading on jobless claims out of the U.S. adding to the climb. The currency has risen from the lowest levels it has tested in a month, reached on Wednesday.

The direction of interest rates returned to the forefront after BoC deputy governor Tiff Macklem reiterated a statement made earlier by the central bank, saying that some modest withdrawal of the existing monetary policy stimulus could be appropriate.

"The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments," Macklem said in notes on the speech released in Ottawa.

His comments came as economists suggest that Canada continues to be buffeted by economic instability in Europe, and a slow economic recovery in the United States.