Canada's Dollar Rises to 2-Month High

Canada's dollar rose to the highest in more than two months after a government report showed inflation accelerated last month, suggesting the Bank of Canada may be less likely to cut borrowing costs at its June meeting., Bloomberg 5/21/2008 6:43:05 AM

The Canadian dollar has increased in seven of the last nine trading days, strengthening 3.3 percent during the period. Interest-rate futures in Canada suggest traders reduced bets the nation's central bank will cut the key rate further.

Canada's dollar strengthened 0.7 percent to 98.50 cents per U.S. dollar at 8:34 a.m. in Toronto, from 99.23 cents yesterday. One Canadian dollar buys $1.0152. Earlier, it touched 98.20 cents, the highest since March 14.

The central bank lowered the target lending rate by a half- percentage point to 3 percent on April 22 to shield the economy from a U.S. economic slowdown.

Canadian consumer prices rose 0.8 percent in April, after a 0.4 percent gain in the previous month, Statistics Canada reported today in Ottawa. The figure compared with the median forecast of a 0.4 percent increase in a Bloomberg News survey of 24 economists.

The core inflation rate advanced 1.5 percent from a year earlier, compared with 1.3 percent in March that was the slowest since July 2005. Economists predicted that measure would also be unchanged. The monthly core inflation rate of 0.3 percent was also faster than the 0.2 percent economists forecast.