The Canadian dollar nudged higher versus the greenback on Tuesday in step with higher oil prices, while domestic 10-year government yield reached a five-week peak, supported by the view of solid economic growth. News that China will adopt a more vigorous fiscal policy to combat slowing economic growth and to counter its current trade tension with the United States renewed appetite for commodities and related investments, analysts said.
At 3:06 p.m. (1906 GMT), the US dollar was 0.1 percent lower against its Canadian counterpart at C$1.3124, reversing some of its gain on Monday, Reuters data showed. Canadian bond yields and other major sovereign yields have risen in the wake of a Reuters report on Friday that said the Bank of Japan is debating whether to scale back its easy monetary policy.
The yield on 10-year Canadian government debt was half a basis point higher at 2.227 percent after touching 2.250 percent earlier Tuesday, which was the highest since June 15, according to Reuters data. "The market tone is suggestive of renewed risk appetite as participants consider China's latest stimulus measures and their implications for global growth," ScotiaBank currency strategists wrote in a research note.