The loonie, as Canada's currency is colloquially known, pushed through a recent tight range between C$1.02 and C$1.0140, as did its commodity-linked cousins the Australia and New Zealand dollars, the latter also hitting a six-week high.

"There has been a change in market thinking here," said Shaun Osborne, chief currency strategist at TD Securities. "We transitioned from a 'buy US dollar dips' market to a 'sell US dollar rallies' market over the past couple of weeks."

Osborne said the loonie's resurgence prompted stop-loss orders after breaking below a 40-day moving average around C$1.0160 and last week's low around C$1.0140.

It ended the session trading at C$1.0149 to the greenback, or 98.53 US cents, compared with C$1.0167, or 98.36 US cents, at Monday's North American close. That was its strongest close since Feb. 19.

"In the Asian session we made slow and steady gains, then we retraced half of that in the North American session," said Camilla Sutton, chief currency strategist at Scotiabank. "We got pulled along with the Aussie today."

The Australian central bank held interest rates steady but said further cuts could be required, while also citing an improved global outlook, Sutton said.

She also cited technical reasons for the loonie's strength, including a breach of the 50-day moving average at C$1.0147 and a Fibonacci retracement at C$1.0141.

The price of Canadian government debt was lower across the curve, with the two-year bond off 2 Canadian cents to yield 1.003 percent, and the benchmark 10-year bond falling 26 Canadian cents to yield 1.876 percent.

"It's more US dollar weakness than Canadian dollar strength, I would say," said Adam Cole, global head of foreign exchange strategy at Royal Bank of Canada. "The fact that equities are doing better is also helping."

The gain coincided with a decent gain in US stock markets that pushed the broad-based S&P 500 closer to an all-time high.