Canadian dollar erases early gains as inflationary pressures grow

TORONTO – The Canadian dollar was higher late morning Friday while the latest inflation data showed rising price pressures, suggesting that a rate cut by the Bank of Canada is off the table.The loonie moved away from the lows of the morning and was up 0.18 of a cent at 91.98 cents US as Statistics Canada reported the consumer price index for April rose at an annualized rate of two per cent, in line with expectations and up from 1.5 per cent the previous month.“We believe this could prove a spark for the Bank (of Canada) to begin toning down its focus on ‘downside risks to inflation’, that has provided a dovish tinge to their official neutral bias, possibly as soon as the next rate meeting on June 4,” said Mark Chandler, head of Canadian FIC Strategy at RBC Dominion Securities.On a monthly basis, the CPI was up 0.3 per cent, lower than the 0.4 per cent reading that had been forecast.In the U.S., positive housing data helped send markets higher heading into the Memorial Day long weekend.The annual rate for new home sales in April rose to 433,000, up from a revised 407,000 in March and better than the 429,000 reading that economists expected. But that is still below levels of 446,000 a year ago.Figures released Thursday showed existing-home sales rose 1.3 per cent in April, the fastest pace since December.Elsewhere on the economic front, a closely watched survey shows that German business confidence has dipped, with companies less optimistic about both their current situation and the outlook for the next six months. The Ifo institute said Friday that its confidence index, a key indicator for Europe’s biggest economy, slipped to 110.4 points this month from 111.2 in April.Standard & Poor’s rating agency has upgraded Spain’s sovereign credit grade a notch to BBB, the third agency to do so in recent months and a further sign the country is turning the corner after five years of economic turmoil. The agency cited improved economic prospects and praising the conservative government’s structural and labour reforms since 2010.On the commodity markets, July crude in New York gained 37 cents to US$104.11 a barrel.June bullion faded $1.80 to US$1,293.20 an ounce, while July copper rose two cents to US$3.16 a pound. by Malcolm Morrison, The Canadian Press Posted May 23, 2014 12:05 pm MDT Canadian dollar erases early gains as inflationary pressures grow A loonie is pictured in North Vancouver, Dec.31, 2013. THE CANADIAN PRESS/Jonathan Hayward AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email read more

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