07/19/2013 08:57 EDT | Updated 09/18/2013 05:12 EDT

Canadian dollar higher amid rising inflation, oil at 16-month high

TORONTO - The Canadian dollar closed higher Friday amid rising oil prices and new data that showed inflation was well under control in June.

The loonie was up 0.08 of a cent to 96.46 cents US as Statistics Canada said that inflation came in at an annualized rate of 1.2 per cent, in line with economist expectations and up from a low rate of 0.7 per cent the previous month.

On a month-over-month basis, prices rose at a seasonally adjusted 0.3 per cent.

August crude edged up one cent to US$108.05 a barrel after rising as high as $109.32 earlier in the day, the highest price since March 1, 2012.

Crude's advance this week has been underpinned by another sizable decline in U.S. oil supplies. U.S. crude inventories fell by 6.9 million barrels last week, bringing the three-week decline to 27.1 million barrels. Prices are up 15 per cent over the last four weeks.

September copper was ahead one cent at US$3.14 a pound while August bullion was up $8.70 to US$1,292.90 an ounce.

In other economic news, traders also took in news that China is ending controls on bank lending rates in a move toward creating a market-oriented financial system to support economic growth.

Banks currently lend mostly to state industry rather than the entrepreneurs who create China’s new jobs and wealth. Allowing banks to negotiate their own rates with borrowers could channel more credit to private enterprise.