Canadian dollar lower on July data
Aug 17, 2012 / 6:49 am
The Canadian dollar was lower Friday as the latest reading on inflation made it more unlikely that the central bank will raise interest rates any time soon.
The loonie declined 0.31 to 101.04 cents US after closing Thursday at a fresh 3 1/2 month high.
Statistics Canada reported that the Consumer Price Index declined 0.1 per cent on a seasonally adjusted basis in July, after decreasing 0.2 per cent in June. Economists had looked for a 0.1 per cent rise. This marked the third consecutive monthly decline in the seasonally adjusted CPI.
The agency said Friday that consumer prices rose at an annual rate of 1.3 per cent in the 12 months to July, following a 1.5 per cent gain in June.
Losses in the currency picked up after the release of the report since "today's data suggest little near-term inflationary pressures in the domestic economy, another reason for the Bank of Canada to keep rates on hold," observed CIBC World Markets economist Emanuella Enenajor.
The currency fell about five cents in May and early June to around the 96-cent US level when the European debt crisis turn a turn for the worse as markets focused on high debt levels in Spain. Nervous traders bailed out of risky investments such as equities, commodities and resource-based currencies such as the loonie and piled into U.S. Treasuries.
But optimism has improved on hopes that central bankers are prepared to do whatever is necessary to keep the economic recovery on track and preserve the European monetary union.
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