CANADA FX DEBT-Canadian dollar hits five-week low on broad-based US dollar strength

By Fergal Smith

TORONTO, July 29 (Reuters) - The Canadian dollar weakened to a five-week low against its U.S. counterpart on Tuesday as the greenback posted broad-based gains and investors awaited interest rate decisions by the Federal Reserve and the Bank of Canada.

The loonie CAD= was trading 0.3% lower at 1.3775 per U.S. dollar, or 72.60 U.S. cents, after touching its weakest intraday level since June 23 at 1.3788.

"The main catalyst has been broader-based USD strength," said George Davis, chief technical strategist at RBC Capital Markets.

Recent strength on Wall Street and the potential for tariffs to raise U.S. inflation, reducing prospects of Federal Reserve interest rate cuts, has helped underpin the greenback, he added.

"CAD has generally been caught up in this theme, and weakened in the process," Davis said.

The U.S. dollar .DXY gained ground against a basket of major currencies, including the euro, as investors took stock of Sunday's trade deal between the U.S. and the European Union, which imposed a 15% import tariff on most EU goods.

Both the Fed and the Bank of Canada are due to make interest rate decisions on Wednesday. The BoC is likely to keep its benchmark rate unchanged at 2.75% for the third straight meeting, economists and market analysts predict, as firm core inflation and robust job growth offset trade uncertainty.

Talks between Canada and the United States on a trade deal are at an intense phase, Prime Minister Mark Carney told reporters on Monday, reiterating that an agreement without any tariffs at all was unlikely.

Canada sends about 75% of its exports to the U.S., including oil CLc1, which was up 1.4% at $67.63 a barrel.

Canadian bond yields moved lower across a flatter curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was down 3.3 basis points at 3.496%, trading at its lowest level in a week.