The Canadian dollar edged lower against its U.S. counterpart on Tuesday ahead of an expected interest rate cut by the Bank of Canada and as the threat of U.S. trade tariffs drew renewed focus, leading to broad-based gains for the American currency.

The U.S. is Canada’s biggest trading partner and consumes over three-fourths of all its exports. The sell-off in shares and impending trade tensions with the U.S. pushed bond yields down, with the 10-year government bond yield falling 7.5 basis points to 3.189 per cent.

The Canadian dollar strengthened against its U.S. counterpart on Friday, adding to its weekly gain, as few new details on proposed U.S. tariffs led to broad-based declines for the American currency. The loonie was trading 0.