TORONTO – The dollar pulled back more than half a cent early Friday after Statistics Canada reported the country’s inflation rate fell to its lowest level in more than three years.
The loonie was down 0.52 of a cent to 100.77 cents US before stock markets opened.
Statistics Canada said the annual inflation rate dropped to 0.8 per cent in November, affected primarily by lower gasoline prices and discounting by car dealers to attract sales. Economists had been expecting inflation rate would be 1.0 per cent, a drop of two-tenths of a per cent from the rate in October.
The agency also reported Canada’s gross domestic product grew 0.1 per cent in October.
Meanwhile, the U.S. continues to grapple with the uncertainty of the “fiscal cliff” negotiations.
Republican leaders postponed a vote on legislation that would raise taxes on wealthier Americans, bringing the country closer to the so-called “fiscal cliff.” House Speaker John Boehner conceded late Thursday that there were not enough votes from Republican lawmakers for his plan that would have allowed higher tax rates for those making $1 million and above.
Many Republicans don’t want higher taxes at all.
A deal must be reached by the end of this year to avoid going over the so-called “fiscal cliff,” which would involve the automatic imposition of hundreds of billions of dollars in spending cuts and tax increases that could plunge the world’s largest economy back into recession and depress economies around the world.
In commodities, the January crude contract on the New York Mercantile Exchange dropped 87 cents to US$89.26 a barrel.
March copper was up one cent at US$3.55 a pound while February bullion added $2.90 to US$1,648.80 an ounce.