TORONTO _ The Canadian dollar was little changed Friday amid a stronger than expected showing on retail sales and tame inflation data.
The loonie was down 0.01 of a cent to 91.36 cents US as Statistics Canada reported that the consumer price index declined 0.2 per cent month-month in July, versus the 0.1 per cent dip that economists had expected. This translated to an annualized inflation rate of 2.1 per cent in July, weaker than the 2.2 per cent reading that was forecast and down from 2.4 per cent the previous month.
Retail sales for June jumped 1.1 per cent over May, much higher than the consensus estimate that called for a 0.3 per cent advance.
Excluding the vehicle sector, sales rose 1.5 per cent.
Markets were generally cautious amid a deterioration in the Russian/Ukraine crisis while traders looked to a key speech from Federal Reserve chairwoman Janet Yellen later in the morning.
The Fed's Janet Yellen is expected to focus on the labour market in her speech at the central bank's annual economic symposium in Jackson Hole, Wyo. The health of the labour market is critical for when the Fed decides to hike interest rates, which have been held near zero since the financial crisis.
While U.S. job creation has steadily improved and averages about 200,000 jobs a month, there are worries about increased slack. The participation rate in the U.S. has fallen to a percentage in the low 60s. Also of concern is the number of workers employed part-time for economic reasons, and the high level of long-term unemployment.
The Fed has been generally expected to raise rates mid-2015 but there are concerns the Fed may move even earlier.
Rising rates are seen as a drag for the stock markets since some investors would choose to invest their money in securities with a guaranteed return, like bonds.
Also highly-anticipated is an afternoon speech by European Central Bank chairman Mario Draghi. Growth in the eurozone has slowed dramatically and his audience will want to hear of any indication that the ECB plans on further stimulus measures, such as quantitative easing. That stimulus, where central banks have bought up massive amounts of bonds to keep long term rates low, has been adopted by other western countries, notably the U.S. where the Fed is unwinding its third round of QE.
Meanwhile, geopolitical concerns were on the boil after Ukraine accused Russia of a ``direct invasion'' which ``happened for the first time under the cover of the Red Cross.''
That charge from Ukrainian Security Service chief Valentyn Nalyvaichenko came after Russia sent dozens of aid trucks into rebel-held eastern Ukraine on Friday without Kiev's approval.
The aid is intended for civilians in the city of Luhansk, where pro-Russian separatists are besieged by government forces.
But in the past few days, Ukraine says its troops have recaptured significant parts of the city and suspicions are running high that Moscow's humanitarian operation may instead be aimed at halting Kiev's military momentum.
Traders sought safety in gold and U.S. Treasurys. The December bullion contract in New York gained $4.20 to US$1,279.60 an ounce.
The yield on the benchmark U.S. Treasury was 2.396 per cent, down 0.11 of a point from Thursday.
Elsewhere on the commodity markets, October crude was down 39 cents to US$93.57 a barrel while September copper rose two cents to US$3.20 a pound.