TORONTO: The Canadian dollar firmed against the US dollar on Tuesday, further recovering from a six-week low hit on Monday, as crude oil prices trimmed earlier losses and US inflation data met expectations.
Crude oil, which rallied on Monday on heightened geopolitical tensions following the Paris attacks, still traded lower on Tuesday as the focus returned to global oversupply.
The US Labor Department said its Consumer Price Index increased 0.2 percent in October, reversing September's 0.2 percent drop, while the so-called core CPI, which strips out food and energy costs, gained 0.2 percent after a similar rise the prior month.
At 8:43 a.m. ET (1343 GMT), the Canadian dollar was trading at C$1.3299 to the greenback, or 75.19 US cents, stronger than the Bank of Canada's official close on Monday of C$1.3325, or 75.05 US cents.
The currency's strongest level of the session was C$1.3299, while its weakest level was C$1.3345.
Against the euro, the Canadian dollar firmed to C$1.4285, approaching its strongest level since July, after dovish remarks from Peter Praet, a member of the European Central Bank's Executive Board, weighed on the single currency.
Canadian government bond prices were lower across the maturity curve, pressured by the rotation into stocks and US inflation data that supported the view that the Federal Reserve will raise interest rates next month.
The two-year price was down 2 Canadian cents to yield 0.625 percent and the benchmark 10-year fell 24 Canadian cents to yield 1.676 percent.
The Canada-US two-year bond spread was -25.5 basis points, 1.8 basis points wider, as US Treasuries underperformed at the front and the belly of the curve, while the 10-year spread was 0.6 of a basis point narrower at -61.8 basis points.
US crude prices were down 0.38 percent to $41.58, while Brent crude lost 0.36 percent to $44.40.
Copper prices plunged to their lowest in more than six years as fears about demand growth in top consumer China and a higher dollar fueled negative sentiment.
The Quebec government said on Monday that its $1 billion investment in a partnership with Bombardier Inc will be financed through the government's annual borrowing program.
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