News Column

Canadian dollar higher despite geopolitical worries amid rising inflation

July 18, 2014

Malcolm Morrison, The Canadian Press

TORONTO - The Canadian dollar was resilient Friday as the latest data showed higher than expected inflation pressures.

The loonie was up 0.29 of a cent to 93.24 cents US as Statistics Canada reported that the consumer price index rose 0.1 per cent during June versus expectations for a slight decline. That translated into an annualized gain of 2.4 per cent a two-year high against the 2.3 per cent advance that economists forecast.

The agency said higher prices were broad-based.

Bank of Canada governor Stephen Poloz said earlier this week that he was still convinced that the current bump in inflation is temporary and that prices will begin to moderate later this year.

Geopolitical concerns rose after a Malaysian Airlines jetliner was shot down Thursday over Ukraine.

Ukraine accused pro-Russian separatists of shooting down the Malaysia Airlines plane with 298 people aboard with a surface to air missile, sharply escalating the crisis in the region and threatening to draw both East and West deeper into the conflict. The rebels denied downing the aircraft.

Markets were also focused on the Middle East as Israel launched a ground offensive in Gaza aimed at destroying militants' tunnels and rocket launcher sites.

Commodity prices were lower with August crude on the New York Mercantile Exchange down 29 cents to US$102.90.

Gold prices backed off after running up $17 on Thursday with the August contract down $7.30 to US$1,309.60 an ounce.

September copper was three cents lower to US$3.18 a pound.

Also due Friday morning is the University of Michigan's latest reading on consumer confidence.

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Source: Canadian Press DataFile

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