TORONTO – The Canadian dollar continued to rack up losses Friday morning amid a strengthening U.S. dollar and lower than expected price pressures last month.

The loonie was down 0.31 to 94.78 cents US as Statistics Canada said the July consumer price index came in at an annualized rate of 1.3 per cent, up from 1.2 per cent in June.

Economists had looked for Canada’s inflation rate to rise by two-tenths of a point to 1.4 per cent.

Higher gasoline prices were the main reason for a higher consumer price index in July. Gasoline prices jumped 6.1 per cent, which helped pushed the overall cost of transportation higher.

On a month-to-month basis, prices were only one-tenth of a point higher in July than they had been in June.

The dollar has tumbled about two US cents this past week as the U.S. currency rose against other currencies amid growing conviction that the U.S. Federal Reserve will move this year to cut back on its monetary stimulus.

The Fed has been buying US$85 billion of bonds every month to keep rates low and encourage investment. There is still a great deal of doubt about when the Fed might embark on tapering its asset purchases and the pace of such a cutback.

Speculation about what the Fed may do about its asset purchases continued to drive bond yields higher with the benchmark 10-year U.S. Treasury up 0.02 of a point from late Thursday afternoon to 2.92 per cent.

Bond yields are up about 120 basis points since Fed chairman Ben Bernanke first mentioned the possibility of the Fed tapering its bond purchases in May.

Commodities were with the October crude contract on the New York Mercantile Exchange off three cents to US$105 a barrel.

September copper edged up a penny to US$3.34 a pound while December bullion was up $1 to US$1,371.80 an ounce.