Canada’s dollar climbed to the strongest level in a week after an inflation gauge rose in June for a second month past the central bank’s 2 percent target.
The currency gained versus most of its 16 major peers after the consumer price index increased 2.4 percent from a year earlier, the fastest in more than two years, the government reported. The data came two days after the Bank of Canada said inflation gains are temporary and that the nation’s economy won’t fully recover for two years. It held the key interest rate at 1 percent.
“The market was positioned for Canadian-dollar weakness following the Bank of Canada, and I think the market was caught off-guard,” said Adam Button, a currency analyst at Forexlive.com in Montreal, said in a phone interview. “It’s clear that they will hold rates probably for two years, and traders are looking for a chance to sell.”