TORONTO, Aug 26 (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Wednesday as the greenback posted broad-based gains and trade uncertainty revived concerns over Canada's economic outlook.
The loonie was trading 0.4% lower at 1.3885 per U.S. dollar, or 72.02 U.S. cents, after touching its weakest intraday level since August 19 at 1.3892.
"The (trade) dispute has capped the currency’s recent recovery by reviving concerns over exports, investment and business confidence," said Kevin Ford, FX & macro strategist at Convera.
The U.S. imposed new 50% tariffs on $20 billion of Canadian imports on Saturday after talks between the two countries collapsed.
Canada hit back on Tuesday with retaliatory tariffs on about $20 billion worth of U.S. annual imports and rolled out aid for businesses and workers.
The U.S. dollar (.DXY), opens new tab rose against a basket of major currencies after U.S. inflation data slightly increased expectations for a rate hike from the Federal Reserve ahead of the Jackson Hole symposium of central bankers this week.
"A clear hawkish signal from Fed Chair Kevin Warsh at Jackson Hole could extend the move (in USD-CAD) above 1.39, although Warsh may retain his cautious communication style," Ford said. "Canada’s second-quarter GDP report will test the other side of the pair by showing whether the spring rebound carried enough momentum into the tariff shock."
Economists expected data on Friday to show that Canada's economy grew at an annualized rate of 3.4% in the second quarter after two straight quarterly contractions.
The price of oil, one of Canada's major exports, edged down as investors focused on Strait of Hormuz talks between Iran and Oman, while shipping disruption continued in the major oil-exporting region. U.S. crude oil futures were trading 0.1% lower at $82.27 a barrel.
Canadian government bond yields rebounded across the curve. The 10-year was up 4 basis points at 3.662% after touching an earlier near-two-week low at 3.614%.
Reporting by Fergal Smith; Editing by Chris Reese
