Canadian dollar notches 13-day high as greenback slides
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar strengthened to a near two-week high against its U.S. counterpart on Tuesday, with the currency extending the gains it notched the day before when Canada avoided the immediate implementation of planned U.S. trade tariffs.
The loonie was trading 0.6% higher at 1.4345 to the U.S. dollar, or 69.71 U.S. cents, after earlier touching its strongest level since Jan. 22 at 1.4306.
"I think what we're seeing is a broader pullback for the U.S. dollar," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.
The U.S. dollar fell against a basket of major currencies as President Donald Trump's tariff threats were interpreted more as a negotiating tactic rather than an end goal.
On Monday, the loonie hit its weakest intraday level since April 2003 at 1.4793. That was before Trump suspended his threat of steep tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement with the two neighboring countries.
"The takeaway is that even if the tariffs aren't imposed this month that the disruption still to businesses and consumer sentiment may require the Bank of Canada to cut rates more than previously thought," Chandler said.
Investors see a roughly 70% chance the Bank of Canada will ease further in March, after last month lowering the benchmark rate by 25 basis points to 3% to support the economy.
The price of oil, one of Canada's major exports, was trading 0.9% lower at $72.52 a barrel due in part to ongoing tensions between the U.S. and China.
Canadian bond yields were mixed across the curve. The 2-year was down 2.4 basis points at 2.623% but holding well above the near three-year it hit during Monday's session at 2.459%.
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