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Loonie Strengthens After Strong Canadian Inflation Data

The Canadian dollar moved up against its major counterparts in the European session on Friday, following the release of a data showing improving domestic consumer inflation in January.

Data from Statistics Canada showed that consumer prices grew 0.5 percent on a seasonally adjusted monthly basis, after rising 0.1 percent in December.

Economists were looking for a 0.5 percent rise.

On year, the consumer price index rose?1.7 percent on an unadjusted basis, following a?1.9 percent increase in December.

This was higher than the 1.5 percent advance seen by economists.

Excluding energy, the CPI increased?1.7 percent, matching the gain in December.

Meanwhile, oil prices dropped amid a stronger dollar as well as on profit taking ahead of the weekly U.S. rig count report from Baker Hughes due later today.

Crude for April delivery fell $0.03 to $62.74 per barrel.

Investors focus on a slew of Fed speeches for further insight on inflation and interest rates.

While Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George discuss the objectives of monetary policy on a panel at the Chicago Booth School of Business event organized in New York, New York Fed President William Dudley and Boston Fed President Eric Rosengren will speak about the balance sheet and Fed policy.

The loonie has been trading higher against most major rivals in the Asian session amid rising appetite, as U.S. government debt yields fell from multiyear highs reached on Wednesday, helping ease worries over inflation and higher interest rates.

The loonie firmed to a 3-day high of 1.2614 against the greenback, after falling to 1.2725 at 12:15 am ET. The next possible resistance for the loonie is seen around the 1.22 mark.

The loonie edged up to 84.57 against the yen, from a low of 83.94 hit at 5:00 pm ET. The loonie is likely to find resistance around the 87.5 level.

Data from the Bank of Japan showed that Japan producer prices rose 0.7 percent on year in January.

That was shy of expectations for a gain of 0.8 percent, which would have been unchanged from the previous month.

The loonie climbed to a 9-day high of 0.9871 against the aussie, following a decline to 0.9970 at 5:00 pm ET. If the loonie rises further, it may find resistance around the 0.98 level.

Having fallen to 1.5675 against the euro at 7:15 pm ET, the loonie reversed direction and strengthened to a 9-day high of 1.5509. The loonie is seen finding resistance around the 1.52 level.

Final data from Eurostat showed that Eurozone inflation eased as estimated in January.

Inflation slowed slightly to 1.3 percent in January from 1.4 percent in December.

The material has been provided by InstaForex Company – www.instaforex.com

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