U.S. benchmark 10-year yields hit their highest in over a decade, while shares globally slipped and the U.S. dollar firmed as investors bet that the Fed would deliver another 75-basis points rate hike on Wednesday to tackle soaring inflation.
Canadian producer prices fell by 1.2% in August from July on lower prices for energy and petroleum products, Statistics Canada said.
Investors tend to put more stock in the consumer price index, which is due for release on Tuesday.
The underlying pressures driving inflation in Canada are likely to peak in the fourth quarter, economists told Reuters, though most see signs fast-rising prices are becoming entrenched and warn a recession may be needed to avoid a spiral.
The Canadian dollar was trading 0.5% lower at 1.3330 per U.S. dollar, or 75.02 U.S. cents, after touching its weakest since November 2020 at 1.3344.
Speculators have cut their bullish bets on the Canadian dollar to the lowest in eight weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Sept. 13, net long positions had fallen to 12,425 contracts from 17,910 in the prior week.
The price of oil, one of Canada's major exports, was pressured by expectations of weaker global demand. U.S. crude oil futures declined 3% to $82.54 a barrel.
Canadian government bond yields rose and the curve inverted further, tracking the move in U.S. Treasuries.
The 2-year rose 2.1 basis points to 3.835%, approaching the 15 year-peak it touched intraday on Friday at 3.870%, while the 10-year was up 1.3 basis points at 3.160%.
(Reporting by Fergal Smith; Editing by Nick Zieminski)
