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TORONTO — The Canadian dollar weakened
against its U.S. counterpart on Tuesday, pulling back from its
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highest level in nearly three weeks, as U.S. inflation data
bolstered bets that the Federal Reserve would continue to
tighten aggressively.
Equity markets globally fell and the greenback
jumped as U.S. consumer prices unexpectedly rose in
August from July, cementing bets of a third straight
75-basis-point interest rate hike from the Federal Reserve next
week.
The price of oil, one of Canada’s major exports, reversed
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earlier gains, with U.S. crude futures down 0.3% at
$87.54 a barrel.
The Canadian dollar was trading 0.7% lower at 1.3083
to the greenback, or 76.44 U.S. cents, after earlier touching
its strongest since Aug. 26 at 1.2955.
Meanwhile, bets rose that the Bank of Canada would raise its
benchmark interest rate by 50 basis points rather than 25 basis
points at its next policy decision on Oct. 26.
The central bank hiked by 75 basis points last week, lifting
rates to a 14-year high of 3.25%.
Canadian government bond yields were higher across the
curve, tracking the move in U.S. Treasuries. The 2-year
jumped 10.2 basis points to 3.705%, while the 10-year
was up 4.7 basis points at 3.191%.
(Reporting by Fergal Smith; editing by Jonathan Oatis)
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