TORONTO, Aug 19 (Reuters) - The Canadian dollar strengthened to a two-and-a-half-month high against its U.S. counterpart on Wednesday as the greenback posted broad-based declines and after Canada avoided for now new U.S. tariffs on its goods.
The loonie was trading 0.5% higher at 1.3823 per U.S. dollar, or 72.34 U.S. cents, its strongest level since June 2.
U.S. President Donald Trump announced late on Tuesday that he was putting a three-day pause on new 50% tariffs set to go into effect on Canadian goods at midnight, saying the two countries had reached a deal.
"A three-day suspension of threatened US tariffs, announced overnight, has offered the loonie a temporary reprieve, though whether this persists will hang on the outcome of negotiations in the coming days," strategists at Monex Europe said in a note.
The U.S. dollar fell against a basket of major currencies as a selloff in U.S. Treasuries eased, with investors counting on minutes from the Federal Reserve's latest policy meeting to offer fresh guidance later in the day.
Yields on 30-year U.S. Treasuries fell sharply from around their highest level in 19 years, after the Treasury Department announced that it would double the size of liquidity support buyback operations for longer-dated bonds.
Canadian bond yields moved lower across much of a flatter curve, with the 10-year down 2.2 basis points at 3.675%.
The price of oil, one of Canada's major exports, rose on uncertainty over shipping through the Strait of Hormuz and other ongoing supply disruptions in the market. U.S. crude oil futures were trading 0.6% higher at $85.41 a barrel.
Reporting by Fergal Smith; Editing by Mark Porter
