TORONTO, July 28 (Reuters) - The Canadian dollar weakened to a 10-day low against its U.S. counterpart on Monday but its decline, ahead of a Bank of Canada interest rate decision this week, was the smallest by far among the Group of 10 currencies.
The loonie was trading 0.2% lower at 1.3730 per U.S. dollar, or 72.83 U.S. cents, after touching its weakest intraday level since July 18 at 1.3742.
The U.S. dollar (.DXY), jumped 1% against a basket of major currencies after the U.S. and the EU struck a framework trade pact, the latest in a flurry of deals to avert a global trade war.
"It's mostly a broad-based (U.S.) dollar recovery story that began earlier in July," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.
"It's a technical correction supported by higher U.S. interest rates here in July. I think it's got a little bit more room to run, but what concerns me is that the big events this week are still ahead of us."
Both the Federal Reserve and the Bank of Canada are due to make interest rate decisions on Wednesday.
The BoC is likely to keep its benchmark rate unchanged at 2.75% for the third straight meeting, economists and market analysts predict, as firm core inflation and robust job growth offset trade uncertainty.
Talks between Canada and the United States on a trade deal are at an intense phase, Prime Minister Mark Carney told reporters, reiterating that an agreement without any tariffs at all was unlikely.
Canada sends about 75% of its exports to the U.S., including oil which settled 2.4% higher at $66.71 a barrel.
Canadian bond yields edged higher across the curve. The 10-year was up one basis point at 3.535%.
Reporting by Fergal Smith; Editing by Chizu Nomiyama
