BUSINESS

Loonie higher after report shows inflation at lowest level in nearly 2 years

06/22/2012 09:28 EDT | Updated 08/22/2012 05:12 EDT
TORONTO - The Canadian dollar moved slightly higher Friday as the country's inflation rate dropped to its lowest level in nearly two years.

The loonie gained 0.45 of a cent to 97.60 cents US after losing nearly a cent amid commodity drops a day earlier.

A report from Statistics Canada said the inflation rate fell to 1.2 per cent in May as Canadians paid less for gasoline, video equipment and some types of clothing, while price gains in many other consumer goods moderated.

Economists had expected a big decline in inflation in May from April's two per cent, but the actual drop was much steeper and took the consumer price index to its lowest level since June 2010.

Meanwhile, Moody’s Investors Service moved to cut the credit ratings of 15 of the world's largest banks, including Barclays, Deutsche Bank and Royal Bank (TSX:RY), over concerns related to banks with significant financial markets businesses because those markets have become so volatile.

In commodities, August gold rose $1.40 at US$1,566.90 an ounce on the New York Mercantile Exchange, after losing $50 Thursday.

The August crude contract closed $1.56 higher at US$79.76 a barrel, ending the week about down about five per cent.

July copper prices gained one cent to US$3.31 a pound.