Friday, October 9th11.3°C

Canadian dollar rises, data shows inflation remained weak in December

TORONTO - The Canadian dollar closed higher Friday as price data showed inflation continues to be weak.

The loonie was up 0.21 of a cent at 90.31 cents US as Statistics Canada said the annual inflation rate for December increased to 1.2 per cent on an annual basis compared with 0.9 per cent in November, largely because of higher gasoline prices. The reading met economists' forecasts.

The rise came amid a volatile day on financial markets with investors worried about sharp drops in the values of currencies in several emerging markets, including Turkey, Russia, South Africa and Argentina.

These drops were sparked by moves by the U.S. Federal Reserve to cut back on its massive bond purchases, a key stimulus measure that fuelled a stock market rally and also kept long-term rates low. But U.S. bond yields have risen as the Fed moves to taper its purchases, meaning investors are taking their money out of emerging markets.

"Pressure in the more vulnerable emerging market capital markets continues and has attracted significant global attention driving risk aversion higher on fears of possible contagion outside of the epicentres," observed Camilla Sutton, chief FX strategist, managing director, Scotiabank Global Banking and Markets.

"Argentina, Turkey and South Africa are under tremendous pressure, which has yet to ease."

The rout in emerging market assets followed signs that manufacturing was contracting in China, a major driver of global economic growth.

The Canadian currency has had another tough week, down 0.8 of a cent after the Bank of Canada left its key interest rate unchanged Wednesday and noted that inflation has been lower than expected and won't return to its ideal target of two per cent until 2016.

The low inflation rate means the central bank isn't under any pressure to push up Canadian interest rates, a move that would tend to strengthen the dollar by attracting more foreign investments.

On the commodity markets, the March crude contract on the New York Mercantile Exchange lost 68 cents to US$96.64 a barrel.

Risk averse traders sent February gold up $2 to US$1,264.30 an ounce while March copper edged a cent lower to US$3.27 a pound.

The Canadian Press

Read more Business News

Recent Trending

Today's Market
S&P TSX13964.36-14.30
S&P CDNX552.26+5.20
S&P 5002014.89+1.46
CDN Dollar0.7723-0.0001
Natural Gas2.52+0.02

Okanagan Companies
Pacific Safety0.225-0.005
QHR Technologies Inc1.25+0.02
Metalex Ventures0.07+0.02
Russel Metals21.26-0.29
Copper Mountain Mining0.66+0.05
Colorado Resources0.07+0.00
ReliaBrand Inc0.0175+0.0009
Sunrise Resources Ltd0.02+0.00
Mission Ready Services0.075-0.005
Decisive Dividend Corp3.25+0.14
Diamcor Mining0.97+0.03


23545623949 Milford Road
3 bedrooms 4 baths
more details
Click here to feature your property
Please wait... loading

Income for life?

Photo: Thinkstock.comIn almost every conversation I have with clients these days, the topic swings to interest rates. What direction they’re going, how long will they stay where they are and how...

Perfect (reno'd) home

Photo: Thinkstock.comHow many times have you found a home in the perfect location, but it needs too much work as per the home inspection? There is a great program available through most lenders that w...

5 Claim misconceptions

Photo: Thinkstock.comIf you have been hurt in an accident or as a result of medical negligence you will likely look to your friends and family for some advice on how to deal with the situation. These ...



Member of BC Press Council