Investing.com - The U.S. dollar rose to a six-year high against its Canadian counterpart on Friday, as upbeat U.S. economic data underlined the diverging monetary policy stance between the Federal Reserve and the Bank of Canada.
USD/CAD hit highs of 1.3006, a level not seen since March 2009, before settling at 1.2972 in late trade, up 0.1% for the day. The pair ended the week with a gain of 2.47%.
Data on Friday showed that U.S. consumer prices rose 0.3% in June, the fifth consecutive monthly increase, while core prices, which exclude food and energy, increased 0.2% last month, adding to signs of firming inflation.
A separate report showed that U.S. housing starts surged 9.8% to 1.174 million units in June. Analysts had expected housing starts to increase by 6.2% last month.
Meanwhile, U.S. building permits jumped 7.4% to 1.343 million units in June, the most since July 2007, pointing to a rapidly strengthening housing market.
Federal Reserve Chair Janet Yellen said earlier in the week that the central bank was on track to raise interest rates by the end of the year if the economy continues to grow as expected.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.3% to end at 98.09 late Friday, the strongest level since April 23.
For the week, the index rose 1.9%, the biggest weekly gain since May, amid growing indications that a rate hike is coming in the U.S. later this year.
Meanwhile, in Canada, data on Friday showed that consumer prices rose 0.2% in June, in line with expectations. On a yearly basis, consumer prices increased by 1.0% last month.
Core consumer prices, which exclude the eight most volatile items, were flat in June, compared to expectations for a 0.1% decline.
On Wednesday, the Bank of Canada cut interest rates to 0.5% from 0.75% and lowered its growth forecast for this year, largely due to a weaker outlook for business investment in the energy sector.
In the week ahead, market players will focus on U.S. data on home sales and jobless claims for further indications on the strength of the economy and the timing of an interest rate hike.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Tuesday as there is no relevant data on this day.
Monday, July 20
Canada is to report on wholesale sales.
Wednesday, July 22
The U.S. is to release private sector data on existing home sales as well as a government report on crude oil inventories.
Thursday, July 23
The U.S. is to report on initial jobless claims.
Canada is to publish data on retail sales.
Friday, July 24
The U.S. is to round up the week with reports on manufacturing activity and new home sales.