The Canadian dollar held steady against its major rivals on Friday following the Statistics Canada report revealed that the nation's inflation rate in May slowed more-than analysts had predicted.
Statistics Canada said consumer prices rose 1.2 percent in the 12 months to May. Economists were looking for consumer prices to rise 1.5 percent on an annual basis, following a 2.0 percent increase in April.
Excluding energy, the Consumer Price Index (CPI) rose 1.7 percent in the 12 months to May after increasing 2.1 percent in April. The report also showed that its seasonally adjusted core consumer price index was flat in May, after rising by 0.4 percent in the previous month.
The Bank of Canada's core index, which the bank uses to measure inflation relative to its 2 percent target rate, advanced 1.8 percent in the 12 months to May, slower than the 2.1 percent gain in April. Analysts had expected the core CPI to rise 1.9 percent in May.
The Bank of Canada aims to keep inflation at the 2 percent midpoint of an inflation-control target range of 1 to 3 per cent. The seasonally adjusted monthly core index was unchanged in May, following a 0.4 percent increase in the previous month.
Crude oil, the Canada's key export, was lingering below $80 Friday morning as traders fret over the strength in the global economic recovery after poor manufacturing data from out of China and Europe yesterday.
Light Sweet Crude Oil (WTI) futures for August delivery, the most actively traded contract, edged up $0.48 to $78.68 a barrel.
Yesterday, oil settled below $80, a fresh 8-month low, on demand concerns after some weak economic data from China and U.S., coupled with a strengthening dollar. Prices were also impacted by the more-than-expected U.S. crude oil stockpile increase last week. Investor sentiments were at a low after the Federal Reserve failed to provide any monetary stimulus measures, widely expected this time.
The Canadian dollar that tested yesterday's multi-day high of 1.2886 against the euro ahead of the data stabilized around the 1.29 area following the report. The loonie is presently worth 1.2892 against the euro with 1.2870 seen as the next likely resistance level and 1.2960 as the probable support.
Germany's business sentiment weakened more than expected in June, reports said citing the latest survey results from Ifo Institute. The business confidence index fell to 105.3 from 106.9 a month ago. Economists were expecting the index to fall to 105.6.
On the other hand, the current assessment index rose unexpectedly to 113.9 from 113.2. The reading was well above the consensus forecast of 112. Economic expectations deteriorated in June to 97.3 from 100.8 a month ago. The index stayed below the 99.8 level forecast by economists.
The Canadian dollar that fell below the 1.03 level against the US dollar after gap of 8-days at the time of the release leveled off around the 1.0285/90 area shortly. Against the yen, the loonie steadied at 78.10 after having dropped to a 2-day low of 77.79 early in the session.
by RTT Staff Writer
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