At 9:35 a.m. EDT (1335 GMT), the Canadian dollar CAD=D4 was trading 0.56 percent higher at C$1.3078 to the greenback, or 0.7644 US cents.
Ottawa's annual inflation rate hit 3.2 per cent in July, pushing past already-surging national figures, according to Statistics Canada.
He adds that the Bank of Canada could also move to increase the interest rate in the fall in response to the strong inflation report and that would mean higher borrowing costs.
Canada's consumer-price index rose 3.0% on a year-over-year basis in July, Statistics Canada said Friday, following a 2.5% rise in the.
The Bank of Canada can use interest rate hikes as a tool to help prevent inflation from climbing too high.
The Canadian dollar traded up at 76.38 cents United States compared with an average of 76.03 on Thursday after Statistics Canada reported the annual inflation rate hit 3.0 per cent in July, its highest level since September 2011.
But the bank's preferred measures of core inflation remained stable in July.
Reitzes expects the central bank to keep its key interest rate target on hold at its September 5 announcement, but foresees a raise in October.
"If we're getting a little more pleasant talk or pleasant surprises in terms of cooler heads coming to the table to discuss the trade positions a little more rationally, I think that's certainly a positive thing and the markets should take it as such".
Leading the way in that regard was a 28.2% increase in the cost of air transportation, 25.4% increase in the price of gas, a 5.2% increase in mortgage interest and a 4.4% increase in food purchased at restaurants.
"The overall backdrop for inflation hasn't changed all that much".
The rates of all eight components rose on a year-on-year basis in July.
The agency says the consumer price index was pushed up by higher gasoline prices and air transportation costs.