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The Canadian dollar was the only G10 currency to lose ground against its U.S. counterpart on Tuesday as investors worried that Washington could reimpose tariffs on Canadian aluminum, with the loonie pulling back from a near two-week high.

The loonie was trading 0.2% lower at 1.3543 to the greenback, or 73.84 U.S. cents. The currency touched its strongest intraday level since June 11 at 1.3486 before turning lower. 

Canada denied its aluminum exports harm the U.S. market and is underlining that point to its American partners, a Canadian official said after a report that the United States planned to reimpose tariffs it removed last year. 

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“Canadian dollar traders had thought the trade war was behind them,” said Adam Button, chief currency analyst at ForexLive.

If tariffs are reimposed, it would be “a step backwards in Canadian-U.S. trade,” Button said. Canada sends about 75% of its exports to the United States, including oil.

The U.S. dollar lost ground against a basket of major currencies after euro zone Purchasing Managers’ Indexes thumped expectations, boosting the euro. 

The potential for spikes in coronavirus infection rates across the United States to slow the country’s economic recovery could weigh on the greenback in coming months but the loonie is unlikely to benefit, said Button.

“In the broader picture, the U.S. will drag down Canada with it,” Button said.

The decline for the loonie came as oil prices pulled back from an earlier 3-1/2-month high. U.S. crude oil futures settled 0.9% lower at $40.37 a barrel. 

Canadian government bond yields were mixed across a flatter curve, with the 2-year up 1.7 basis points at 0.317%.

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