Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Canadian dollar coins are displayed on a map of North Ameri (Paul Chias/The Canadian Pr)
Canadian dollar coins are displayed on a map of North Ameri (Paul Chias/The Canadian Pr)

Loonie closes slightly higher on increase in March inflation Add to ...

The Canadian dollar closed higher Thursday amid data showing inflation coming in slightly higher than expected.

The loonie ended up 0.04 of a cent to 90.8 cents (U.S.) as Statistics Canada reported that the consumer price index rose 0.6 per cent in March from the previous month, higher than the 0.4 per cent reading that economists had expected. The rise was mostly due to a 3 per cent increase in gasoline prices from February.

Excluding volatile items such as food and energy, the core rate of inflation rose 0.3 per cent, which was in line with expectations.

Year over year, the consumer price index was up 1.5 per cent, up from 1.1 per cent in February.

“Looking ahead, gasoline and natural gas prices are likely to put further pressure on the headline rate in April, but it will be a somewhat slower climb to get core prices to two per cent,” said Avery Shenfeld, chief economist at CIBC World Markets.

The dollar had slid a third of a cent Wednesday in the wake of the Bank of Canada’s announcement that it was leaving its key rate at 1 per cent, where it’s been since September, 2010. The bank also lowered its forecast for first-quarter growth this year to an annualized 1.5 per cent from 2.5 per cent, but attributed the downgrade mostly to the temporary impacts of a unusually severe winter.

But the loonie rebounded Thursday as the “higher-than-expected Canadian inflation has shifted expectations back toward a firmly neutral from the neutral-dovish reaction to … [Wednesday’s] Bank of Canada statement,” said Colin Cieszynski, senior market analyst at CMC Markets.

Commodities were mixed as the May crude contract on the New York Mercantile Exchange rose 54 cents to $104.30 a barrel.

May copper rose 2 cents to $3.05 a pound while June gold bullion declined $9.60 to $1,293.90 an ounce.

Report Typo/Error

Next story




Most popular videos »

More from The Globe and Mail

Most popular