The Canadian Press

The Canadian dollar was slightly higher Friday morning in the wake of data showing that the country’s annual inflation rate came in higher than expected in February.

The loonie was up 0.31 of a cent to US98.96 cents after Statistics Canada said Friday that consumer prices rose 1.6 per cent last month, following a 1.9 per cent increase the previous month. Economists had been expecting prices to rise at an annualized rate of 1.4 per cent.

One reason for the dollar’s steady run towards parity with the U.S. dollar this year has been the expectation that the Bank of Canada will raise interest rates, likely as soon as this summer.

“While the Bank will not overreact to the persistent high-side surprises just yet, rate hikes are coming up fast on the near-term horizon,” said BMO Capital Markets chief economist Doug Porter.

“We continue to expect the tightening cycle to begin in July, but cannot completely rule out the Bank going ahead of that if core inflation does not back down soon.”

Meanwhile, the Toronto stock market could be headed for a negative start to trading Friday as a stronger U.S. dollar again helped depress energy prices.

The April crude contract on the New York Mercantile Exchange dropped 49 cents to US$81.71 a barrel.

Gold prices also backed off with the April bullion contract in New York down $4.80 to US$1,122.70 an ounce while May copper headed two cents higher to US$3.41 a pound.

The TSX finished lower Thursday after worries about the Greek debt crisis strengthened the greenback and punished commodity prices.

The country said it might turn to the International Monetary Fund for support if European leaders can’t agree to a bailout plan next week. Worries about Greece’s debt have hung over stock markets for the past two months.

U.S. futures pointed to a weak open as the Dow Jones industrial futures ticked ahead one point to 10,716, the Nasdaq futures eased a quarter point to 1,941.5, and the S&P 500 futures added a fifth of a point to 1,161.5.

New York markets closed mainly higher Thursday after the latest inflation reading in the U.S. came in flat, which reassured investors that the U.S. Federal Reserve will keep interest rates low for quite some time yet.

In corporate news, shares in Palm Inc. plunged almost 20 per cent in pre-market trading in New York after the company reported a wider than expected quarterly loss, and warned about its current quarter sales. The company said its having a difficult time getting consumers to pay attention to its phones in a market dominated by iPhones and BlackBerrys.

Oil and gas producer Nexen Inc. (TSX:NXY) and partner Shell (NYSE:RDS.A) have made a “significant” oil discovery in the eastern Gulf of Mexico, Nexen said Friday. Calgary-based Nexen said this would be the third discovery in the area and its results have “exceeded our pre-drill expectations.”

Eldorado Gold Corp. (TSX:ELD) reported profits of $33.3 million in its fourth quarter as revenue from gold sales increased 29 per cent due to record production and higher gold prices.

Overseas, Japan’s Nikkei 225 stock average climbed 0.8 per cent and Hong Kong’s market rose 0.2 per cent.

London’s FTSE 100 index was up 0.63 per cent, Frankfurt’s DAX edged up 0.2 per cent while the Paris CAC 40 was up 0.53 per cent.