The loonie was up 0.26 of a cent to 89.21 cents US as Statistics Canada said sales were up 1.3 per cent, against the 0.7 per cent rise that had been expected.
The agency also reported that Canada’s annual inflation rate fell to 1.1 per cent in February from 1.5 per cent the previous month. But on a month-to-month basis, prices rose 0.8 per cent from January.
Economic optimism that followed the release of two pieces of U.S. data on Thursday sent commodities higher with the May crude contract on the New York Mercantile Exchange moved up 56 cents to US$99.46 a barrel.
The April gold contract gained $5.50 to US$1,336 an ounce while May copper rose two cents to US$2.95 a pound.
The U.S. Conference Board’s index of leading indicators, an indicator of future economic activity, rose in February by the largest amount in three months. And a key manufacturing reading, the Philadelphia Fed's manufacturing index, rebounded in March from a negative reading in February.
The data helped persuade investors that the U.S. economy is strengthening to a point where it can withstand higher short-term interest rates.
Federal Reserve chairwoman Janet Yellen said Wednesday that the U.S. central bank could begin raising short-term rates six months after it halts its bond purchases around year’s end. The Fed has been cutting back on those purchases — a key element of stimulus that had kept long-term rates low — in $10-billion increments since December, lowering monthly purchases so far from $85 billion to $55 billion.
Yellen's comment on interest rates helped sink the Canadian dollar by about a cent this past week.
Another source of pressure was Bank of Canada governor Stephen Poloz, who said earlier in the week that interest rate hikes in Canada could be further away than thought.
He added that a rate cut by the Bank of Canada could not be ruled out.