TORONTO, Jan 30 (Reuters) - The Canadian dollar notched a two-week high against its U.S. counterpart on Tuesday, but the gains were modest a day ahead of a Federal Reserve policy decision and domestic GDP data.
The loonie was trading 0.1% higher at 1.3402 to the greenback, or 74.62 U.S. cents, after touching its strongest intraday level since Jan. 15 at 1.34.
The currency has been "guided higher by rallying equities and improving sentiment for much of the week," Kyle Chapman, FX markets analyst at Ballinger & Co in London, said in a note. "But the loonie hit a brick wall at the 1.34 level. With the Fed and GDP in view, traders have been hesitant to push it much higher."
The U.S. central bank is expected to leave rates unchanged at the close of its two-day policy meeting on Wednesday, and investors will focus on any clues from Fed Chair Jerome Powell on the likelihood of a rate cut in March.
Analysts expect Canadian GDP, also due on Wednesday, to post a rise of 0.1% in November after a flat reading in October. As the domestic economy slows, the Bank of Canada's focus is shifting to when to cut borrowing costs rather than whether to hike rates again.
The price of oil, one of Canada's major exports, rose on continuing tensions in the Middle East and as the International Monetary Fund raised its forecast for global economic growth. U.S. crude oil futures settled 1.4% higher at $77.82 a barrel.
Canadian government bond yields were mixed across a flatter curve, tracking moves in U.S. Treasuries. The 2-year rose 1.6 basis points to 4.056%, while the 10-year was down 1.9 basis points at 3.430%.
Reporting by Fergal Smith; Editing by Leslie Adler
