Article Highlights

  • Canadian dollar at C$1.2466, or 80.22 U.S. cents
  • Sixth round of NAFTA talks under way in Montreal
  • Bond prices climb across the yield curve
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The Canadian dollar weakened against its U.S. counterpart on Tuesday but held within a narrow range as investors assessed prospects for global trade and talks to renegotiate the NAFTA trade deal.

U.S. President Donald Trump’s imposition of import tariffs on washing machines and solar panels stirred fears in Asia of more protectionist measures out of Washington.

The tariffs come as the sixth and penultimate round of talks on renegotiating the North American Free Trade Agreement between Canada, the United States and Mexico get underway in Montreal. The talks are due to run to Monday.

Canada sends about 75 percent of its exports to the United States. Its economy could be hurt if the U.S. withdraws from NAFTA as President Donald Trump has threatened.

Separately, a government source confirmed that Canada will sign on to a revised 11-member Asia-Pacific trade pact. The source said “Canada has secured real gains” in talks to agree a deal.

At 8:56 a.m. EST (1356 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.2466 to the greenback, or 80.22 U.S. cents.

The currency traded in a range of C$1.2440 and C$1.2490.

The price of oil, one of Canada’s major exports, was lifted by healthy world economic growth prospects and production curbs by the Organization of the Petroleum Exporting Countries, Russia and their allies.

U.S. crude prices were up nearly 1 percent at $64.18 a barrel.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year price rose 1.5 Canadian cents to yield 1.796 percent and the 10-year gained 13 Canadian cents to yield 2.223 percent.

On Monday, the 10-year yield touched its highest intraday in more than three years at 2.249 percent.

Canadian retail sales data for November is due on Tuesday and the December inflation report is due on Friday.