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C$ rises as investors await BoC decision this week

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TORONTO — The Canadian dollar edged higher

against its U.S. counterpart on Tuesday as some calm returned to

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equity markets globally after recent declines and ahead of a

Bank of Canada policy decision this week.

Global equity markets steadied near their lowest

levels since mid-July after they were spooked on Monday by

Moscow’s latest gas supply cuts and amid lingering concern about

central bank efforts to cool inflation.

Money markets expect the Bank of Canada to raise its policy

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rate by three-quarters of a percentage point on Wednesday.

That would move rates into restrictive territory for the

first time in two decades, providing a headwind for Canada’s

economy, including the housing market.

Canada’s soaring house prices will decline sharply next

year, but still not enough to make them affordable as the Bank

of Canada is set to continue raising interest rates and keep

them higher for longer, Reuters polls showed.

The Canadian dollar was up 0.1% at 1.3123 to the

greenback, or 76.20 U.S. cents, after trading in a range of

1.3097 to 1.3149. Last Thursday, the currency touched its

weakest in seven weeks at 1.3207.

The price of oil, one of Canada’s major exports, rose after

the Organization of Petroleum Exporting Countries and allies led

by Russia decided on Monday to cut their October output target

by 100,000 barrel per day. U.S. crude prices were up 1.1%

at $87.85 a barrel.

Canadian government bond yields were higher across the curve

as trading resumed following Monday’s market holiday. The

10-year rose 7.5 basis points to 3.170%, tracking

the increase in U.S. Treasury yields.

(Reporting by Fergal Smith

Editing by Nick Zieminski)

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