The Canadian dollar was little changed against its U.S. counterpart on Wednesday, holding near its lowest in nearly seven weeks as the Bank of Canada left interest rates unchanged and investors focused on talks to revamp the NAFTA trade pact.

The Bank of Canada said it was closely monitoring the North American Free Trade Agreement (NAFTA) negotiations and other trade policy developments as it held its policy interest rate at 1.50 per cent.

The central bank, which has raised interest rates four times since July 2017, said more hikes would be needed to keep inflation on target.

Story continues below advertisement

“I think the market went into the meeting expecting pretty much what it got, that the Bank of Canada would leave rates on hold and that they would do nothing to discourage the market from its pricing for an October hike,” said Daniel Katzive, head of FX strategy North America at BNP Paribas in New York.

“There is a big question mark related to NAFTA and I think that’s what the focus is on now,” Katzive said.

The United States and Canada reopened talks in a bid to salvage NAFTA amid a threat by U.S. President Donald Trump to proceed alone with a new pact with Mexico.

At 3 p.m. (1900 GMT), the Canadian dollar was trading nearly unchanged at $1.3187 to the greenback, or 75.83 U.S. cents.

The currency, which touched its weakest since July 20 on Tuesday at $1.3208, traded in a range of $1.3156 to $1.3207.

Canada posted its smallest trade deficit in more than 1-1/2 years in July as exports were boosted by higher prices for crude oil, Statistics Canada said.

Global stocks fell as investors weighed the possibility of Trump following through on plans to impose a fresh round of tariffs on Chinese goods right after a public comment period ends on Thursday.

Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

Still, the country’s currency is likely to rally over the coming months, according to foreign exchange strategists in a Reuters poll, who forecast that trade uncertainty will fade.

The price of oil , one of Canada’s major exports, settled 1.7 per cent lower.

Canadian government bond prices were mixed across a steeper yield curve, with the 10-year falling 1 Canadian cent to yield 2.237 per cent.