Canadian dollar edges lower, bond yields jump as oil tops $100 a barrel
TLT•Canadian bond yields track U.S. Treasuries higher
Bank of Canada Governor Tiff Macklem said last week policymakers were prepared to raise borrowing costs multiple times if inflation remained too high.
Canadian bond yields moved higher across the curve, tracking the moves in U.S. Treasuries.
The 2-year was up 11.7 basis points to 3.288%, trading at its highest level since November 2024.
U.S. yields rise on producer prices and higher oil
U.S. Treasury yields climbed after U.S. producer price data pushed up expectations for a Federal Reserve interest rate hike next week, while rallying oil prices also prompted inflation worries.
"Inflation pressures are heating up and broadening beyond energy, creating a more challenging backdrop for the Fed," Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets, said in a note.
U.S. crude oil futures CLc1 were trading 5.8% higher at $101.65 a barrel after the biggest spike in attacks on shipping since the Iran war began spurred trader concerns about supply disruptions. Oil is one of Canada's major exports.
U.S. consumer price data, due on Friday, could offer further clues on prospects for Fed rate hikes. Canada's monthly Consumer Price Index report is due on Monday.
Canadian dollar slips as oil surge lifts inflation worries
The Canadian dollar edged lower against the greenback on Thursday and bond yields jumped as the price of U.S. oil topped $100 a barrel for the first time since May, adding to investor concerns about the inflation outlook.
The loonie was trading 0.1% lower at 1.3810 per U.S. dollar, or 72.41 U.S. cents, after moving in a range of 1.3801 to 1.3835. The currency has pulled back from a three-week high of 1.3757 on Tuesday as the trade war between the United States and Canada intensified.
