Canadian dollar erases early losses as inflationary pressures grow
TORONTO - The Canadian dollar closed higher Friday as the latest inflation data showed rising price pressures, suggesting that a rate cut by the Bank of Canada is off the table.
The loonie moved away from the lows of the morning and was up 0.2 of a cent at 92.0 cents US as Statistics Canada reported the consumer price index for April rose at an annualized rate of two per cent, in line with expectations and up from 1.5 per cent the previous month.
"We believe this could prove a spark for the Bank (of Canada) to begin toning down its focus on 'downside risks to inflation', that has provided a dovish tinge to their official neutral bias, possibly as soon as the next rate meeting on June 4," said Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities.
On a monthly basis, the CPI was up 0.3 per cent, lower than the 0.4 per cent reading that had been forecast.
In the U.S., positive housing data helped send markets higher heading into the U.S. Memorial Day long weekend.
The annual rate for new home sales in April rose to 433,000, up from a revised 407,000 in March and better than the 429,000 reading that economists expected. But that is still below levels of 446,000 a year ago.
Figures released Thursday showed sales of existing homes rose 1.3 per cent in April, the fastest pace since December.
Elsewhere on the economic front, a closely watched survey showed that German business confidence has dipped, with companies less optimistic about both their current situation and the outlook for the next six months. The Ifo institute said Friday that its confidence index, a key indicator for Europeâ€™s biggest economy, slipped to 110.4 points this month from 111.2 in April.
Standard & Poorâ€™s rating agency has upgraded Spain's sovereign credit grade a notch to BBB, the third agency to do so in recent months and a further sign the country is turning the corner after five years of economic turmoil. The agency cited improved economic prospects and praised the conservative governmentâ€™s structural and labour reforms since 2010.
On the commodity markets, July crude in New York gained 61 cents to US$104.35 a barrel.
June gold bullion faded $3.30 to US$1,291.70 an ounce, while July copper rose three cents to US$3.17 a pound.
Read more Business News
- Fire destroys log homePenticton / S. Okanagan - 11:10 am
- Fire lights up the skyVernon / N. Okanagan - 9:49 am
- More than 5,000 behind in taxesKelowna - 5:00 am
- Teachers picket Clark luncheonPenticton / S. Okanagan - 5:00 am
|QHR Technologies Inc||1.21||-0.01|
|Anavex Life Sciences||0.26||0.00|
|Copper Mountain Mining||2.80||-0.03|
|Sunrise Resources Ltd||0.03||-0.005|
|Mission Ready Services||0.15||0.00|
Photo: Thinkstock.comWays to reduce your Debt:Make a budget and get budget counselingA basic first step for debt reduction is to prepare a budget and plan your spending. Once you have a budget, you mu...
The Big Picture Geopolitical tensions rattle markets The spectre of rising geopolitical tensions in Ukraine and Gaza cast a shadow over an otherwise positive week in the markets. News that a passenger...
Photo: ContributedI have the pleasure of witnessing people delegate tasks quite often. Sometimes with tremendous success and sometimes with disastrous consequences. I have chaired a lot of committees...