Investing.com - The U.S. dollar rose against its Canadian
counterpart on Friday after softer-than-expected inflation data
repelled investors away from the loonie.
Better-than-expected consumer sentiment numbers in the U.S.
bolstered the greenback's appeal.
In U.S. trading on Friday, USD/CAD hit 1.0279, up 0.86%, up from a
low of 1.0181 and off a high of 1.0312.
The pair sought to test support at 1.0083, Monday's low, and
resistance at 1.0312, the earlier high.
Canada's consumer price index contracted 0.2% in April from March,
defying expectations for a 0.1% gain.
The country's core CPI, stripped of volatile food and energy costs,
rose 0.1%, less than market expectations for a 0.2% gain, sparking
talk the Bank of Canada has room to trim interest rates if need be.
Meanwhile in the U.S., the Thomson Reuters/University of Michigan's
preliminary consumer sentiment index rose to 83.7 in May from 76.4
in April, surging past expectations for a rise to 78.0.
The report added inflation expectations for this month remained
unchanged at 3.1%.
The numbers came a day after Federal Reserve Bank of San Francisco
President John Williams said that monetary authorities may begin to
unwind stimulus programs this summer and possibly end such policies
by year end.
Philadelphia Fed President Charles Plosser, a known inflation hawk,
added separately that the Fed should consider scaling back the
program next month.
Monetary stimulus tools, such as low interest rates, dovish
language and the Fed's monthly USD85 billion asset-purchasing
program, weaken the dollar to spur recovery, and their dismantling
would allow the greenback to firm.
The Canadian dollar, meanwhile, was down against the euro and up
against the yen, with EUR/CAD up 0.45% and trading at 1.3190 and
CAD/JPY up 0.03% at 100.36.
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