TORONTO: The Canadian dollar firmed against a broadly weaker US counterpart on Tuesday as oil prices stabilized, although it extended losses against safe-haven currencies on equities turmoil overseas.
The US dollar fell to its lowest in more than three months against a basket of major currencies as financial turbulence fed doubts about the Fed's ability to raise rates this year. Testimony from US Federal Reserve Chair Janet Yellen is awaited on Wednesday.
Losses in Asian stock markets sent investors scurrying for safe havens, while a drop in bank shares kept European shares under pressure. Yields on longer-term Japanese bonds fell below zero for the first time.
US crude prices rose 0.07 percent to $29.71 a barrel, but a report showing supply will not drop quickly enough to erode a global surplus tempered gains.
At 9:15 a.m. EST (1415 GMT), the Canadian dollar was trading at C$1.3869 to the greenback, or 72.10 US cents, stronger than the Bank of Canada's official close of C$1.3934, or 71.77 US cents.
The currency's strongest level of the session was C$1.3854, while its weakest level was C$1.3959.
Against the yen, the Canadian dollar touched its weakest since Jan. 21 at 80.09 yen.
Canadian government bond prices were higher across the maturity curve on the flight to safety.
The two-year price rose 1 Canadian cent to yield 0.339 percent and the benchmark 10-year was up 15 Canadian cents to yield 1.035 percent. The 10-year yield hit a new record low at 1.008 percent.
The maturity curve flattened further as the long-end outperformed. The spread between the 2-year and 10-year yields narrowed by 1 basis point to 69.6 basis points, its tightest since January 2015 when it touched 69.1 basis points.
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