Canadian dollar recovers after sell-off; CPI weighs
By Jennifer Kwan
TORONTO (Reuters) - Canada's dollar eked out a small gain against its U.S. counterpart on Friday, recovering along with broader equity and oil prices after a sharp sell-off the day before on global economic growth fears.
Oil rebounded Friday from 18-month lows and global stocks stabilized as investors looked to possible crisis resolution at upcoming meetings of European leaders rather than at weak data. <MKTS/GLOB>
At around 8:55 a.m., the Canadian currency was at C$1.0288 to the greenback, or 97.20 U.S. cents. But it touched C$1.0301 versus the U.S. dollar, or 97.08 U.S. cents, its weakest since June 13, just after domestic data showed Canada's annual inflation slowed more sharply than expected in May to 1.2 percent.
Inflation, down from 2 percent in April, was below the 1.5 percent median forecast by analysts in a Reuters poll.
The closely watched core annual inflation rate, a better measure of underlying price trends because it excludes eight volatile items, stayed closer to the Bank of Canada's 2 percent target, easing to 1.8 percent in May from 2.1 percent in the previous month.
"Overall it's a little bit softer than market expectations so it will likely add to the underlying softness we've seen in the Canadian dollar recently," said Doug Porter, deputy chief economist at BMO Capital Markets.
However, Porter added the central bank has "got much bigger items on their plate" than inflation.
"I don't think inflation is crowding the top of anybody's worry list at this point. So I don't think it has a big effect on the Bank, but at the very least it just sort of reinforces the message that there's not any rush for the Bank to act on its tightening bias," he said. Continued...