US officials have agreed to remove tariffs on steel and aluminum imported from Canada and Mexico in 48 hours, paving the way for the three North American counties to enact a new trade pact, the Washington Post and Politico reported.

"At least we have more certainty in the North American region," said Michael Goshko, corporate risk manager at Western Union Business Solutions.

"A country as trade dependent as Canada needs all the good news it can get at the moment."

Canada sends about 75pc of its exports to the United States, including oil.

Oil prices dipped but were on track for a weekly gain on rising concerns over potential further supply disruptions in Middle East shipments due to US-Iran political tensions.

US crude prices were down 0.2pc at $62.77 a barrel.

At 1:02 p.m. (1702 GMT), the Canadian dollar was trading 0.1pc higher at 1.3457 to the greenback, or 74.31 US cents.

Earlier in the session the loonie touched its weakest level since April 25 at 1.3514 as investors became more worried about the trade war between the United States and China.

Canada runs a current account deficit so its economy could be hurt by a slowdown in the global flow of capital or trade.

For the week, the loonie was down 0.3pc.

Canadian government bond prices were lower across a flatter yield curve, with the two-year down 4 Canadian cents to yield 1.608pc and the 10-year declining 10 Canadian cents to yield 1.689pc.

The gap between the 2- and 10-year yields narrowed by 1.1 basis points to a spread of 8.1 basis points in favor of the longer-dated bond.

Canada's interest rate markets are due to close early ahead of the Victoria Day holiday on Monday.