The Canadian dollar finished little changed against the US currency on Friday, shrugging off both inflation data and remarks by Finance Minister Ralph Goodly. The currency finished at C$1.2325to the US dollar or 81.14 US cents, down slightly from C$1.2319 to the US dollar, or 81.18 US cents, at Thursday's session close.
The currency moved little after Statistics Canada said consumer prices rose 1.6 percent in May, slightly less than expected. That confirmed analysts' opinions that no immediate rate hike is in store, though they said the Bank of Canada would still have to tighten monetary policy at some point.
The Lonnie stuck to a moderate trading band for much of the session, moving between C$1.2268 and C$1.2348. "The Canadian dollar is moving sideways," said Jeremy Friesian, senior currency strategist at RBC Capital Markets.
"What surprises me is that we've had this string of really strong data and the market is still discounting bank moves. They are still only pricing in 25 basis points (rate hike) by the end of the year." Canada has recently produced strong monthly numbers on indicators for manufacturing, trade, employment and retail sales, prompting some to say the Bank of Canada will soon resume raising interest rates after being on hold since the fall.
Canada's key overnight rate is at 2.5 percent. Remarks by Finance Minister Goodie in New York produced little reaction on currency markets. He said that Canadian businesses have adjusted well to the stronger Canadian dollar, though the manufacturing sector still needs more adjustment.
The Canadian dollar has also found better footing in recent sessions as concerns about the staying power of the minority Liberal government, which had weighed on the Lonnie, are abating. Rising oil prices also supporting the currency as Canada is a major oil exporter to the United States.
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