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Canadian dollar higher despite geopolitical worries amid rising inflation

Canadian dollars (loonies) are pictured in Vancouver, Sept. 22, 2011. THE CANADIAN PRESS/Jonathan Hayward

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Canadian dollars (loonies) are pictured in Vancouver, Sept. 22, 2011. THE CANADIAN PRESS/Jonathan Hayward

TORONTO - The Canadian dollar closed higher Friday as the latest data showed higher than expected inflation pressures.

The loonie was up 0.19 of a cent to 93.14 cents US as Statistics Canada reported that the consumer price index rose 0.1 per cent in June versus expectations for a slight decline. That translated into an annualized gain of 2.4 per cent — a two-year high — against the 2.3 per cent advance that economists forecast.

The agency said the higher prices were broadly based.

Bank of Canada governor Stephen Poloz said earlier this week that he was still convinced that the current bump in inflation is temporary and that prices will begin to moderate later this year.

Traders also monitored rising geopolitical concerns.

Markets had been roiled Thursday after a Malaysian Airlines plane was shot down over Ukraine.

Ukraine accused pro-Russian separatists of bringing down the jetliner with 298 people aboard with a surface-to-air missile, sharply escalating the crisis in the region. The rebels denied downing the aircraft.

Markets were also focused on the Middle East as Israel launched a ground offensive in Gaza aimed at destroying militants' tunnels and rocket launcher sites.

Commodity prices were mixed with August crude on the New York Mercantile Exchange slipping six cents to US$103.23 a barrel.

Gold prices backed off after running up $17 on Thursday, with the August contract down $7.50 to US$1,309.40 an ounce.

September copper was four cents lower at US$3.18 a pound.

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