Loonie Weakens As Canada Consumer Prices Fall Unexpectedly

The Canadian dollar slipped against its major counterparts in the European session on Friday, following a data showing an unexpected decline in the nation's consumer price inflation in February.

Data from Statistics Canada showed that Canada consumer price inflation declined 0.2 percent on a seasonally adjusted monthly basis in February, following a 0.7 percent gain in January. Economists were looking for a 0.2 percent gain.

Core inflation, excluding food and energy, was flat on month, after rising 0.5 percent in the previous month.

Meanwhile, Crude oil futures rose after Saudi Arabia indicated lower oil shipments to the U.S. in March, in order to comply with the production cuts agreed under the OPEC agreement.

Traders are looking ahead to the weekly U.S. oil rig count from Baker Hughes due later in the day.

The loonie showed mixed performance in the Asian session. While the currency declined against the greenback and the aussie, it held steady against the euro. Against the yen, the loonie rose.

The loonie reversed from an early 10-day high of 1.0158 against the aussie, dropping to 1.0192. Continuation of the loonie's downtrend may see it challenging support around the 1.03 zone.

Pulling away from an early high of 83.41 against the yen, the loonie edged down to 82.96.The next possible support for the loonie-yen pair may be seen around the 81.00 mark.

Final data from the Cabinet Office showed that Japan's leading index rose less than estimated in January.

The leading index climbed marginally to 104.9 in January from 104.8 in December. The score was revised down from 105.5.

The loonie slipped to 2-day lows of 1.3385 against the greenback and 1.4462 versus the euro, from its early highs of 1.3346 and 1.4377, respectively. Continuation of the loonie's downtrend may see it challenging support around 1.35 against the greenback and 1.47 against the euro.

Looking ahead, Federal Reserve Bank of New York President and CEO William Dudley will participate in a fireside chat with business and economics students at York College in New York at 10:00 am ET.

At 11:30 am ET, Canadian Finance Minister Bill Morneau will give a speech in Toronto.