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The Canadian dollar CADUSD on Tuesday posted its biggest decline in more than two months against the greenback as U.S. inflation data bolstered bets that the Federal Reserve would continue to raise interest rates aggressively.

Wall Street tumbled and the U.S. dollar jumped against a basket of major currencies after hotter-than-expected U.S. consumer price data dashed hopes that the Fed could relent and scale back its policy tightening in the near future.

“Over the summer, the market grow comfortable with 4% terminal rates in North America, but the latest round of inflation data hints that might not be enough,” said Adam Button, chief currency analyst at ForexLive.

Money markets priced in a terminal rate, or peak level for rates, next year of about 4.25% in the United States and 4% in Canada.

The price of oil, one of Canada’s major exports, reversed earlier gains, with U.S. crude futures settling down 0.5% at $87.31 a barrel.

The Canadian dollar was trading 1.2% lower at 1.3145 to the greenback, or 76.07 U.S. cents, its biggest decline since July 5.

Earlier in the day, it touched its strongest level in nearly three weeks at 1.2955.

Meanwhile, Canadian Prime Minister Justin Trudeau announced C$4.5 billion ($3.43 billion) in measures intended to provide relief from high inflation to low-income families.

Canadian government bond yields were sharply higher across the curve, tracking the move in U.S. Treasuries.

The 2-year touched its highest since December 2007 at 3.778% before dipping slightly to 3.763%, up 16 basis points on the day. The 10-year was up 7 basis points at 3.214%.

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