CANADA FX DEBT-C$ propped up by strong Canada inflation data

Fri Feb 17, 2012 4:38pm EST
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* C$ ends at C$0.9957 vs US$, or $1.0043

* Gains 0.6 percent for the week

* Canada Jan. inflation up more than expected

* Bond prices retreat across curve

By Jennifer Kwan

TORONTO, Feb 17 (Reuters) - Canada's dollar eked out a small gain against the U.S. dollar on Friday after data showed inflation rose more than expected last month, but the move is unlikely to prompt the Bank of Canada to raise interest rates this year.

The annual inflation rate increased to 2.5 percent in January from 2.3 percent in December, helped higher by strong energy and transportation prices.

The year-over-year increase was slightly greater than the 2.3 percent predicted by analysts, pushing the currency to C$0.9941 against the greenback, or $1.0059, from around C$0.9961, or $1.0039 immediately before the release.

Part of the reason why the Canadian dollar managed to notch gains was the relatively strong CPI this morning, said Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities International in New York.   Continued...