Canadian dollar pulls back from two-year low as bond market steadies

Loonie at 72.89 U.S. cents

was little changed against its U.S. counterpart on Wednesday, pulling back from its weakest level in more than two years, as oil prices rose and the Bank of England moved to dampen fears of contagion across the financial system.

Investors have worried that higher borrowing costs could tip some major economies into recession as central banks hike interest rates aggressively to tackle inflation. U.S. crude prices were up 1.8 per cent at $79.87 a barrel as production cuts caused by Hurricane Ian outweighed downward pressure from a strengthening U.S. dollar and expected U.S. crude stockpile builds.

As higher borrowing costs slow Canada’s outsized housing market, investors are betting the Bank of Canada will raise interest rates to a lower end-point than the Federal Reserve, an outcome that could spell more trouble for the Canadian dollar.

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