By Commodity News Service Canada
WINNIPEG, Nov. 21 – The Canadian dollar jumped sharply higher relative to the US dollar on Friday, underpinned by strong Canadian inflation data, analysts said.
Statistics Canada said inflation was up by 0.1 per cent in October, beating expectations that inflation would drop after rising 0.2 per cent last month.
The positive inflation data could mean the Bank of Canada will raise interest rates sooner than first anticipated. But, the US is still expected to push rates higher before Canada does, which continues to overhang the loonie.
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The Canadian dollar closed at US$0.8898 or US$1=C$1.1239 on Friday, which compares with Thursday’s North American settlement of US$0.8845 or US$1=C$1.1306.
Strong commodity prices, including crude oil, gold and copper, were also supportive, as was news that China and Europe are working at stimulating economic growth.
Canadian bonds closed mixed, consolidating ahead of the weekend. Shorter-term bonds moved lower in reaction to the positive Canadian inflation data, brokers said.
The two-year bond yielded 1.066% late Friday, from 1.047% late Thursday. The 10-year bond yielded 2.008%, from 2.018%. Bond yields fall as their prices rise.
