Canadian Dollar Edges Higher Against US Counterpart on Strong Inflation Data

The Canadian dollar moved higher against its US counterpart on Friday, following fresh data that revealed that Canada’s inflation improved to a healthier level. However, the loonie’s gains against the greenback were limited as new home sales improved in the United States, which supported the US dollar.

Statistics Canada, the nation’s office for statistical releases, said today that the consumer price index rose 2.1% in January from a year earlier, following a 1.5% gain in December 2016. The index, which tracks inflation of prices in the country, had a 1.5% gain in January when excluding gasoline prices, from an increase by 1.4% in December.

The transportation segment in the index rose 6.3% last month from a year earlier, as recovering crude oil prices drove gasoline prices higher by 20.6% in the twelve months leading to January. Home prices also increased, as the shelter index rose 2.4% on a yearly basis in January. Meanwhile, food prices were 2.1% lower last month, led by declines in prices of fresh vegetables.

South of Canada, the US Census Bureau reported today that new home sales rose 3.7% in January to reach 555,000 units. The US dollar rose following the data, before reducing its gains later in the day. The greenback still managed to stay within a tight range against the Canadian dollar today.

USD/CAD traded at 1.3087 as of 18:50 GMT on Friday, from 1.3062 at 13:40 GMT, the pair’s lowest level today. USD/CAD started trading today at 1.3099.

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