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C$ slides after hotter-than-expected U.S. inflation data

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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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