For the first time since the Bank of Canada raised interest rates on July 20, bond traders bet that Governor Mark Carney will leave borrowing costs unchanged when he and his fellow policy makers meet in two weeks.
Canada’s dollar rallied and government bonds fell after Bank of Canada policy makers said higher borrowing costs “may become appropriate” because economic growth and inflation will be faster than it forecast.
Canada’s dollar climbed the most since December versus its U.S. counterpart after consumer prices rose more than forecast, prompting traders to ratchet up bets the central bank will resume raising interest rates.
Canada’s dollar rose from the lowest level in almost three months as a record increase in employment last month encouraged speculation that the central bank will raise borrowing costs as early as June.
Canada’s dollar rose, touching the strongest level against the greenback in more than three years, as investors took Bank of Canada statements to mean the central bank may become more aggressive with interest-rate increases.
Canada’s dollar fell against its U.S. counterpart on concern the global economy is slowing, even as a government report showed Canada’s jobless rate unexpectedly fell in May to the lowest level since January 2009.