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Canadian Dollar Leads as BOC Raises the Bar on Hawkishness

  • Bank of Canada shocks with bigger-than-expected rate hike
  • Canadian currency has been among G-10 outperformers this month
The Bank of Canada in Ottawa, Ontario, Canada

The Bank of Canada in Ottawa, Ontario, Canada

Photographer: David Kawai/Bloomberg

Canada’s dollar surged after the nation’s central bank delivered a bigger-than-expected interest-rate hike, catapulting it ahead of major developed-market peers on the path toward tighter monetary policy.

The so-called loonie climbed against all of its Group-of-10 peers, advancing as much as 0.7% against its US counterpart to C$1.2937 per greenback. Short-end Canadian rates leaped after the Bank of Canada shocked traders with a 100-basis-point move in its benchmark rate, extending an earlier advance fueled by hotter-than-anticipated US inflation figures. The two-year bond yield rose as much as 19 basis points to 3.4%.