TORONTO, May 12 (Reuters) - The Canadian dollar weakened to a one-month low against its U.S. counterpart on Monday as a truce in the trade war between the United States and China triggered broad-based gains for the American currency.
The loonie was trading 0.5% lower at 1.4007 per U.S. dollar, or 71.39 U.S. cents, after touching its weakest intraday level since April 10 at 1.4015.
The U.S. dollar (.DXY), surged against a basket of major currencies as the U.S. and China reached a deal to temporarily cut reciprocal tariffs.
"Continued strength in the DXY (U.S. dollar index) is expected to keep the loonie under pressure in the next trading session," said Karim Francis, head of currency risk management, North America, at Convera Canada ULC.
Easing U.S.-China trade tensions could lift American business confidence, attract foreign investment to the United States and reduce prospects of Federal Reserve interest rate cuts, Francis said.
In contrast, downbeat Canadian employment data on Friday has led to investors raising bets on a Bank of Canada interest rate cut next month.
Investors see a 55% chance that the Canadian central bank would resume its easing cycle at a policy decision on June 4 after pausing in April.
The U.S.-China trade deal boosted stocks and the price of oil, one of Canada's major exports, and hit safe havens like bonds.
Oil was trading 1.8% higher at $62.11 a barrel, while Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries.
The 10-year was up 5.2 basis points at 3.211%, after earlier touching its highest level since April 24 at 3.259%.
Reporting by Fergal Smith; Editing by Leslie Adler
