Canada’s Inflation Rate Moves Above BOC’s 2-Percent Target

The U.S. Dollar hit its lowest level against a basket of major currencies since March 7 on Friday as investors expressed concerns that escalating trade tensions could hurt global economic growth.

The June U.S. Dollar Index futures contract closed on Friday at 89.033, down 0.440 or -0.49%. For the week, the index was down 0.85%.

Just one day after President Trump signed an executive memorandum that would impose retaliatory tariffs on up to $60 billion in Chinese imports, China urged the United States on Friday to “pull back from the brink” as the world’s two largest economies moved closer to trade war.

China “firmly opposes” the Trump administration’s plans for tariffs on Chinese imports and “would fight to the end” if a trade war were initiated by the U.S., according to a statement from the embassy in Washington, D.C.

“China is strongly disappointed and firmly opposes such an action,” the statement said. “China does not want a trade war with anyone. But China is not afraid of and will not recoil from a trade war. … If trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.”

Commerce Secretary Wilbur Ross told CNBC he doesn’t think there will be a trade war with China resulting from Trump’s latest tariffs. “There will be some ultimate retaliation from the Chinese but I don’t think it’s going to be the end of the earth,” he said on Power Lunch.

It’s not as though we’re blowing them up,” he said. “This is not going to put China into a depression. It’s not going to put us into a depression. This is simply trying to cure abuses.”

British Pound

The British Pound rose after Bank of England rate-setter Gertjan Vlieghe said that interest rates will probably need to rise once or twice a year over the next few years, comments that are likely to help cement investors’ expectations of a BoE rate hike in May.

The GBP/USD settled at 1.4129, up 0.0034 or +0.24%.

Vlieghe, widely regarded as a dovish member of the central bank’s rate setting committee, told an audience of businesses in Birmingham that he believed a tighter labor market would soon require a rate hike.

Mr. Vlieghe said that unemployment was still an important measure of likely wage inflation. As such, provided signs carried on suggesting “that a tight labor market is actually pushing up domestic inflationary pressures”, interest rates would need to be raised.

Canadian Dollar

The Canadian Dollar surged against the Greenback, supported by higher oil prices and hotter-than-expected domestic inflation data that raised the chances of further rate hikes by the Bank of Canada over the coming months.

The USD/CAD settled at 1.2894, down 0.0045 or -0.35%.

The country’s annual pace of inflation jumped 2.2 percent last month at its fastest pace in more than three years as the rate moved above the central bank’s ideal bull’s-eye of 2 percent, Statistics Canada said on Friday.