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The Canadian dollar CADUSD weakened to its lowest level in nearly two years against its U.S. counterpart on Friday as the prospect of further central bank tightening weighed on investor sentiment and domestic data showed wholesale trade falling in July.

Equity markets globally extended this week’s declines as investors braced for a U.S. interest rate hike next week amid more warning signs pointing to a global economic slowdown.

Canada’s economy performed better than some of its G7 peers in the first half of 2022 but has showed signs of losing momentum.

Canadian wholesale trade decreased by 0.6% in July from June on the lower sales in personal and household goods, as well as the building material and supplies subsector, Statistics Canada said.

Separate data showed that Canadian housing starts fell 3% in August compared with the previous month.

The Canadian dollar was trading 0.5% lower at 1.3290 per U.S. dollar, or 75.24 U.S. cents, after touching its weakest since November 2020 at 1.3307.

For the week, the loonie was on track to fall 2%, which would be its biggest weekly decline since August 2021, as hotter-than-expected U.S. inflation data triggered sharp gains for the U.S. dollar against a basket of major currencies.

The greenback added to those gains on Friday, while the price of oil, one of Canada’s major exports, seesawed after tumbling in the previous session. U.S. crude oil futures were down 0.1% at $85.02 a barrel.

Canadian government bond yields were higher across the curve.

The 2-year touched its highest since December 2007 at 3.870% before dipping to 3.850%, up 3.5 basis points on the day. The 10-year was up 2.3 basis points at 3.172%.

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