Canadian dollar climbs to highest level since January as Consumer Price Index exceeded Bank of Canada's 2% target for first time in more than two years

, June 20, 2014 () – The Canadian dollar climbed to the strongest level since January as an inflation gauge exceeded the Bank of Canada’s target for the first time in more than two years.

The currency strengthened for a third day against its U.S. counterpart as separate data showed Canadian retail sales rose more than forecast in April. The consumer price index gained to 2.3 percent in May from a year earlier.

“It emboldens the market participants that are already long the Canadian dollar to add to those positions,” Brad Schruder, director of foreign exchange at Bank of Montreal, said by phone from Toronto before the report. “You cannot have a credible central bank cutting interest rates while CPI is rising.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, rose 0.4 percent to C$1.0776 per U.S. dollar at 8:34 a.m. in Toronto.

The Bank of Canada’s goal for inflation is 2 percent. Economists in a Bloomberg survey forecast today’s report would show the CPI held at that level.

The central bank kept its benchmark interest rate at 1 percent on June 4, with policy makers reiterating concern that low inflation and weak exports are hindering the nation’s economy. Bank Governor Stephen Poloz has said an interest-rate cut can’t be ruled out.

To contact the reporter on this story: Ari Altstedter in Toronto at To contact the editors responsible for this story: Dave Liedtka at Greg Storey

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