C$ posts one-week high as domestic inflation spikes

Fri Feb 24, 2017 9:57am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar notched a one-week high against its broadly weaker U.S. counterpart on Friday as a spike in domestic inflation offset a drop in oil prices.

Canada's annual inflation rate unexpectedly jumped to 2.1 percent in January, its highest in more than two years.

"It is a pretty eye-catching number," said Andrew Kelvin, senior rates strategist at TD Securities.

The chances of a Bank of Canada interest rate hike this year rose to nearly 30 percent from 24 percent before the inflation report, data from the overnight index swaps market showed. BOCWATCH

But economists said the central bank will be untroubled by the headline rise, which was driven by higher gasoline prices.

"My sense is that the Bank of Canada will look through this just given that all three measures of core (inflation) are running below two percent," Kelvin said.

The U.S. dollar .DXY weakened as the "Trumpflation trade" that took the greenback to 14-year highs earlier this year faded, and as worries over France's presidential election eased.

U.S. crude CLc1 prices were down 0.92 percent at $53.95 a barrel after U.S. crude inventories rose for a seventh week. [O/R]   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.   REUTERS/Mark Blinch/File Photo