Bond yields climbed and the U.S. dollar rose against a basket of major currencies as New Zealand's central bank lifted interest rates to a seven-year high, promising more pain to come.
That contrasted with a dovish turn by the Reserve Bank of Australia on Tuesday, which helped boost investor sentiment globally.
The RBNZ's move dispelled "some expectation of a central bank rate pivot," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
Bank of Canada Governor Tiff Macklem is due to speak on Thursday.
Data showing U.S. private employers stepped up hiring in September added to upward pressure on bond yields.
The Canadian dollar was down 0.9% at 1.3635 to the greenback, or 73.34 U.S. cents, after trading in a range of 1.3504 to 1.3640. On Tuesday, the currency touched its strongest intraday level in 11 days at 1.3501.
Canada's exports fell 2.9% in August, largely driven by lower crude oil prices, while imports fell 1.7%, resulting in the smallest trade surplus of the year, Statistics Canada said.
One of Canada's major exports is oil. It added to its gains in recent days as OPEC+ producers looked set to agree deep output target cuts later in the day.
U.S. crude prices rose 0.9% to $87.31 a barrel, while Canadian government bond yields were higher across much of the curve, tracking the move in U.S. Treasuries.
The 10-year rose 4.3 basis points to 3.171% but fell 5 basis points further below its U.S. equivalent to a gap of nearly 54 basis points.
(Reporting by Fergal Smith; Editing by Andrea Ricci)
By Fergal Smith
