The price of oil, one of Canada's major exports, was weighed down by a weaker outlook for demand and a rise in US crude inventories despite expectations of extended supply cuts led by OPEC. US crude oil futures were down 2.0pc at $52.20 a barrel.

US consumer prices barely rose in May, pointing to moderate inflation that together with a slowing economy could increase pressure on the Federal Reserve to cut interest rates this year.

The loonie has benefited this month from expectations that the Bank of Canada will cut interest rates less than the Federal Reserve.

Money markets see about a 50-percent chance of a Bank of Canada interest rate cut by December, while they are pricing in at least two cuts over the same period by the Fed.

At 9:44 a.m. (1344 GMT), the Canadian dollar was trading nearly unchanged at 1.3287 to the greenback, or 75.26 US cents.

The currency, which touched on Monday its strongest level since March 1 at 1.3226, traded in a range of 1.3279 to 1.3304.

With under three weeks to go before proposed talks between the Chinese and US leaders, expectations for progress toward ending the trade war are low and sources say there has been little preparation for a meeting even as the health of the world economy is at stake.

In addition to being a major exporter of commodities, Canada runs a current account deficit, so its economy could be hurt by a slowdown in the global flow of trade or capital.

Canadian government bond prices were higher across much of a steeper yield curve in sympathy with US Treasuries.

The two-year rose 3.5 Canadian cents to yield 1.46pc and the 10-year gained 2 Canadian cents to yield 1.525pc.

On Tuesday, the 10-year yield touched its highest intraday in eleven days at 1.543pc.