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Canadian dollar slips to 6-day low as oil prices fall

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TORONTO — The Canadian dollar weakened against its U.S. counterpart on Monday, giving back some of this month’s gains, as oil prices fell and investors braced for another supersized interest rate hike this week by the Federal Reserve.

The price of oil, one of Canada’s major exports, decreased after weaker-than-expected factory activity data out of China.

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U.S. crude prices were down 1.5% at $86.57 a barrel, while the U.S. dollar advanced against a basket of major currencies at the start of a week packed with data releases and central bank rate-setting meetings.

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The Fed is expected to deliver another 75-basis-point rate hike when its two-day meeting concludes on Wednesday. That would be the fourth such increase in succession, but market pricing indicates roughly a 50% chance the U.S. central bank will then move to a smaller hike of just 50 basis points at its December meeting.

Last Wednesday, the Bank of Canada downshifted the pace of its policy tightening, hiking the benchmark rate by half a percentage point to 3.75% rather than by another 75 basis points. BoC Governor Tiff Macklem is due to appear on Tuesday before a Canadian Senate committee.

The Canadian dollar was trading 0.5% lower at 1.3670 to the greenback, or 73.15 U.S. cents, after touching its weakest level since last Tuesday at 1.3685. For the month, it was on track to advance 1.1%.

Speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Oct. 25, net short positions had decreased to 18,155 contracts from 20,573 in the prior week.

Canadian government bond yields were mixed across a flatter curve on Monday. The 2-year rose 4.7 basis points to 3.898%, while the 10-year was down half a basis point at 3.235%. (Reporting by Fergal Smith; Editing by Paul Simao)

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