TORONTO (Reuters) - The Canadian dollar ended little changed on Friday, with the benefit of stronger oil and other commodity prices offset by tame inflation data that suggested the Bank of Canada will be in no hurry to raise interest rates.
Energy prices rose on supply concerns and expectations that Spain will seek a bailout that could help resolve its debt problems. <MKTS/GLOB>
But Canada’s annual inflation rate in August slipped to 1.2 percent from 1.3 percent in July, well below the central bank’s 2 percent target. This reinforced expectations that the Bank of Canada will not raise rates any time soon. Analysts polled by Reuters has forecast the rate would stay at 1.3 percent.
“For the day, the range that one was expecting this morning has happened. There has been no outlier news — CPI was benign with respect to market expectations,” said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The central bank started signaling in April it might raise rates if the economy continued to grow.
The Canadian dollar finished the session at C$0.9764 against the U.S. dollar, or $1.0242, little changed from Thursday’s North American finish at C$0.9765, or $1.0241. The currency had hit a 13-month high of C$0.9633 on September 14.
“I’d suggest (there’s been) some position squaring into the weekend after some significant gains by the Canadian dollar heading into the week,” Spitz said.
The currency’s flat day contrasted strength in the euro on speculation that Spain may soon request financial aid. <FRX/>
Sources with knowledge of the matter told Reuters Spain is considering freezing pensions and speeding up a rise in the retirement age as it attempts to meet conditions of an international aid package.
Canadian government bond prices rose, with the two-year bond edging up 1 Canadian cent to yield 1.137 percent, and the benchmark 10-year bond up 8 Canadian cents, yielding 1.849 percent.
Additional reporting By Solarina Ho; Editing by Jeffrey Hodgson