By Commodity News Service Canada
WINNIPEG, June 20 – The Canadian dollar closed sharply higher relative to the US dollar, hitting the 93 cents US mark for the first time in months.
Much of the strength was linked to better than expected Canadian inflation data, which could cause the Bank of Canada to take a more hawkish stance on the economy, analysts said.
Statistics Canada said consumer prices rose 2.3 per cent in the 12 months to May, following a 2.0 per cent increase in April. Pre-report estimates called for a 2.0 per cent jump in May.
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The Canadian dollar closed at US$0.9300 or US$1=C$1.0752 on Friday, which compares with Thursday’s North American settlement of US$0.9240 or US$1=C$1.0823.
Better than expected Canadian retail sales data was also bullish. StatsCan said retail sales rose 1.1 per cent to C$41.62 billion in April, marking a new record high. Expectations called for a 0.6 per cent jump.
A sharp rally in gold prices and a firmer tone in crude oil and copper prices were also supportive for the Canadian currency.
Canadian bonds closed lower on Friday, reacting to the better than expected Canadian inflation and retail sales data, market watchers said.
The two-year bond yielded 1.137% late Friday, from 1.082% late Thursday. The 10-year bond yielded 2.303%, from 2.264 Thursday. Bond yields fall as their prices rise.
