CANADA FX DEBT-C$ hits 4-week low amid market jitters ahead of Fed meeting

* The Canadian dollar weakens 0.3% against the greenback * Hits its weakest level since May 16 at 1.2941 * Canadian factory sales rise 1.7% in April * Bond yields Canadians loosen across the curve TORONTO, June 14 (Reuters) – The Canadian dollar extended its recent declines against its U.S. counterpart on Tuesday as investors feared the Federal Reserve, which begins a two-day policy meeting, could be unable to control inflation without triggering a recession. The loonie was trading down 0.3% at 1.2930 against the greenback, or 77.34 US cents, after hitting its lowest level since May 16 at 1.2941. The losses for the currency came after Monday’s selling on Wall Street confirmed a bear market for the S&P 500. Investors bet the Fed would rise three-quarters of a percentage point on Wednesday after recent CPI data American warmer than expected. Canada sends about 75% of its exports to the United States, including oil. U.S. crude prices rose 1.3% to $122.46 a barrel as tight global supply outweighed fears that fuel demand could be hit by a possible recession and further COVID-19 restrictions. 19 in China. Meanwhile, data showed Canadian factory sales rose 1.7% in April, with sales volumes up 0.9%, adding to evidence of firm economic activity in the second trimester. Money markets have almost fully priced in a three-quarters percentage point rate hike by the Bank of Canada in its next policy announcement on July 13, which would be the biggest hike since August 1998, and expect that rates peak at nearly 4% the next time around. year. Just two weeks ago, investors were expecting a so-called terminal rate of 3%. Yields on Canadian government bonds declined across the curve, following the performance of US Treasuries. The 10-year fell 4.5 basis points to 3.469%, after hitting a 12-year intraday high of 3.551% on Monday. (Reporting by Fergal Smith, editing by William Maclean)

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