By Commodity News Service Canada
Winnipeg, August 22 – The Canadian dollar closed unchanged on Friday amid a stronger than expected showing on retail sales and tame inflation data, analysts say.
At 3:40 CDT Friday, the loonie was flat at US$0.9137 or US$1 = C$1.0950 as Statistics Canada reported that the consumer price index for July declined 0.2 per cent, in comparison 0.1 per cent dip that economists had expected. This translated to an annualized inflation rate of 2.1 per cent, weaker than the 2.2 per cent reading that has been forecast. The rate was also lower from the 2.4 per cent in the previous month.
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Retail sales for June climbed 1.1 per cent higher than May, which was a much larger increase than the consensus estimate of a 0.3 per cent increase.
The market also focused on U.S. Federal Reserve and a key speech from the Fed chairwoman Janet Yellen. Yellen offered no signal that she’s changed her view that the American economy still needs Fed support from interest rates that have been near zero since the financial crisis.
The central bank chief also said that the recession complicated the Fed’s ability to assess the U.S. job market and made it harder to determine when to adjust interest rates. She noted that while the unemployment rate is steadily declining, other gauges of the job market are harder to assess and may reflect continued weakness.
Geopolitical concerns were also an issue as tensions rose after Ukraine accused Russia of a ‘direct invasion’ after Russia sent dozens of aid trucks into a rebel-held area of eastern Ukraine on Friday without approval.
Canadian bonds ended tightly mixed on Friday as the mild domestic inflation data offset a robust retail sales report, analysts say. Canada’s two-year bond yield was at 1.094 per cent, in comparison with 1.089 per cent late Thursday. The 10-year bond yielded 2.076 per cent from 2.083 per cent.