Loonie rises to strongest

Canada's dollar rose, touching the strongest level against the greenback in more than three years, as investors took Bank of Canada statements to mean the central bank may become more aggressive with interest-rate increases. Gains by the currency, nicknamed the loonie, were tempered after a government report on Friday showed inflation didn't increase as much as forecast, quelling speculation the central bank would raise interest rates as soon as September. The currency fell last week against 13 of its 16 most traded counterparts before a report next week forecast to show the nation's economy grew at a faster pace in May than April. "It provided a bit of a counterpoint to what we had earlier in the week in terms of the hawkishness," said Shaun Osborne, chief currency strategist in Toronto at TD Securities, a unit of Canada's second largest bank, referring to the inflation report. "It does suggest there's no rush to tighten. There's a chance that we see the Canadian dollar soften up a little." The Canadian currency strengthened 0.6 per cent to 94.80 cents (Dh3.4) against the greenback, from 95.32 cents on July 15, its second weekly gain. It touched 94.23 cents on July 21, the strongest since November 9, 2007. One Canadian dollar purchases $1.0549. The loonie depreciated 0.9 per cent to C$1.3613 against the euro, and fell 0.2 per cent to 82.85 yen, from levels last week. Consumer prices advanced 3.1 per cent in June from a year earlier after a 3.7 per cent gain in the previous month, Statistics Canada said on Friday in Ottawa. The median forecast of 24 economists in a Bloomberg News survey was for a 3.6 per cent rate of increase. "That's got to be one of the worst misses on CPI that I've seen," said David Love, a trader of interest-rate derivatives at the brokerage Le Groupe Jitney in Montreal, said via email, referring to the consumer price index. Yields on the six-month overnight index swap, a security based on what investors expect the central bank's rate will average during that period, dropped 2.8 basis points to 1.11 per cent after the CPI number, after climbing 7.9 per cent during the three days since Bank of Canada policy makers said on July 19 that monetary stimulus, "will be withdrawn." The statement omitted the word ‘eventually' that had been contained in previous releases. From / Gulf News