By Fergal Smith
TORONTO (Reuters) -The Canadian dollar strengthened to a two-week high against its U.S. counterpart on Tuesday as a downbeat forecast for the U.S. economy by a major investment bank weighed on the greenback.
The loonie was trading 0.5% higher at 1.3615 per U.S. dollar, or 73.45 U.S. cents, after touching its strongest intraday level since July 7 at 1.3606.
Goldman Sachs expects U.S. economic growth to slow to an annual rate of 1.1% in 2025 as tariff-related price increases hold back consumer spending, CNBC reported.
Earlier this month, the investment bank forecast three quarter-point interest rate cuts from the Federal Reserve by the end of 2025.
“The USD has been sold aggressively since these headlines crossed,” said Erik Bregar, director, FX & precious metals risk management, at Silver Gold Bull. “The CAD has clearly benefited from those flows.”
The U.S. dollar fell against a basket of major currencies, its third straight day of declines. The price of oil, one of Canada’s major exports, was also down as investors worried that the global trade war will curb demand for fuel.
U.S. crude oil futures fell 1.5% to $66.18 a barrel.
Canada will use all the time that is available to strike a trade deal with the United States, Prime Minister Mark Carney told reporters, saying the talks were complex.
On Monday, a Bank of Canada survey showed that Canadian businesses see less chance of a worst-case tariffs scenario but remain cautious and are keeping hiring and investment under check.
Canadian government bond yields moved lower across the curve, with the 10-year down 2.6 basis points at 3.493%.
(Reporting by Fergal Smith; Editing by Leslie Adler)
