Global stock markets fell and the US dollar rose against a basket of major currencies after Fed Chair Jerome Powell said it was “very premature” to think of a pause in interest rate hikes and that the peak in interest rates was likely higher than expected would fail.
FX markets expect the Fed to hike interest rates to a peak of 5.125% next year.
Canada’s trade surplus with the world widened to CA$1.1 billion (US$827.4 million) in September as exports and imports rose as values were impacted by the weaker Canadian dollar.
The currency traded 0.4% lower at 1.3765 against the greenback, or 72.65 US cents, after hitting 1.3808, its lowest level since Oct. 21. Since August it has weakened by 7.6%.
Oil prices, one of Canada’s top exports, slid on Thursday as a rise in US interest rates pushed the dollar higher and fueled fears of a global recession that would reduce demand for fuel. US crude fell 2.1% to $88.08 a barrel.
The Canadian government is due to release its new fiscal forecasts and update its spending plans later today amid a faltering economy caused by a sharp rise in interest rates.
Canadian government bond yields were higher across the curve after US Treasuries moved.
The 2-year rate rose 4.6 basis points to 3.995%, while trading 8.7 basis points further below the US equivalent, for a gap of almost 71 basis points, the widest since May 2019.
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