By Commodity News Service Canada
WINNIPEG, May 22 – The Canadian dollar closed sharply lower against its US counterpart Friday, reacting to disappointing Canadian economic data, and robust US inflation figures, analysts said.
Statistics Canada said the consumer price index rose 0.8 per cent in the 12 months to April, the smallest increase since October 2013. Pre-report expectations called for a jump of 1.0 per cent.
In the US, inflation data was more positive. The US government said core inflation rose by 0.3 per cent in April, beating expectations of a 0.2 per cent jump.
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The Canadian dollar closed at US$0.8129 or US$1=C$1.2301 on Friday, which compares with Thursday’s North American settlement of US$0.8191 or US$1=C$1.2208.
Further downward pressure came from weakness in crude oil values, though strength in gold provided some support for the Canadian dollar.
Positive Canadian retail sales data also limited the downside. StatsCan said retail sales rose 0.7 per cent to C$42.5 billion in March, above expectations of a 0.3 per cent jump.
Canadian bonds were lower Friday, following the US Treasury market as it moved lower in reaction to the better than anticipated US inflation data, brokers said.
The two-year bond yielded 0.682% Friday, from 0.667% late Thursday. The 10-year bond yield was at 1.773%, from 1.750%. Bond yields fall as their prices rise.
