TORONTO: The Canadian dollar was little changed against its US counterpart on Wednesday as the currency held onto recent gains ahead of a Federal Reserve interest rate decision, despite the potential for escalated global trade tensions.
A source said the White House was about to propose higher tariffs on $200 billion in Chinese imports, perhaps sparking a new round of trade hostilities.
Canada runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows. The country has its own trade feud with the United States and is also in talks with the US and Mexico to revamp the North American Free Trade Agreement.
Mexican negotiators are optimistic about the possibility of getting a NAFTA deal and are hopeful of progress in coming days, the country's deputy economy minister said ahead of a second ministerial meeting in Washington later this week.
The Federal Reserve is expected to keep interest rates unchanged but solid economic growth combined with rising inflation are likely keep it on track for another two hikes this year.
At 9:11 a.m. EDT (1311 GMT), the Canadian dollar, which rose 1 percent in July, was trading near flat at C$1.3005 to the greenback, or 76.89 US cents. The currency traded in a narrow range of C$1.3000 to C$1.3034.
On Wednesday, the loonie touched its strongest in nearly seven weeks at C$1.2985 after data showing.
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