CANADA FX DEBT-C$ steadies near 4-week low as bond market rout pauses

CANADA FX DEBT-C$ steadies near 4-week low as bond market rout pauses

* Price of U.S. oil falls 0.7% * Canadian housing starts rise 8% in May * Canadian bond yields tumble across the curve TORONTO, June 15 (Reuters) – The Canadian dollar was little changed against its U.S. counterpart on Wednesday, holding near a four-week low, as the European Central Bank held an emergency meeting and ahead of a Federal Reserve interest rate decision. Equity markets globally rebounded and bond yields tumbled as the ECB met to discuss the recent rout in debt markets. Investors have been concerned that central banks would not be able to control inflation without triggering a recession. Bets that the Fed would hike rates by 75 basis points on Wednesday rather than 50 bps have climbed dramatically following hotter-than-expected consumer prices data last week. The Canadian dollar was trading nearly unchanged at 1.2952 to the greenback, or 77.21 U.S. cents, after touching on Tuesday its weakest in more than four weeks at 1.2974. Chances that the Bank of Canada would also raise interest rates by three quarters of a percentage point at its next policy decision on July 13 have been dialed back to 65%, after markets were fully priced for such a move on Tuesday, money market data shows. On Tuesday, Canadian Prime Minister Justin Trudeau said his government was watching rising interest rates “with concern,” when asked about the impact higher borrowing costs were having on housing affordability. Canadian housing starts rose 8% in May compared with the previous month, beating analyst expectations, data from the national housing agency showed. The price of oil , one of Canada’s major exports, fell 0.7% to $118.05 a barrel as the market juggled fears of tight supply with concerns over fuel demand and global economic growth. Canadian government bond yields were lower across the curve, tracking the move in Treasuries and German Bunds. The 10-year fell 14.3 basis points to 3.484%, after touching on Tuesday the highest since May 2010 at 3.638%. (Reporting by Fergal Smith Editing by Bernadette Baum)

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