The loonie was trading 0.2% higher at 1.3186 to the greenback, or 75.84 U.S. cents. The currency, which on Monday touched a four-month low intraday at 1.3130, traded in a range of 1.3177 to 1.3239.
The move higher had little to do with anything originating in Canada, said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.
"What's going on with stocks, with the broad U.S. dollar, I think it is more of a reaction to that," Rai said.
Canada is a major exporter of oil and other commodities, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude prices settled 1.7% higher at $43.35 a barrel, supported by production cuts in the U.S. Gulf Coast as Tropical Storm Laura was forecast to become a major hurricane.
Global shares rose after the U.S. and China reaffirmed their commitment to the Phase One trade deal agreed in January, while the U.S. dollar fell against a basket of major currencies as better-than-expected German economic data boosted the euro.
The economic shock from the coronavirus pandemic will test public confidence in the Bank of Canada's 2% inflation target, Lawrence Schembri, a deputy governor at the central bank, said.
Bank of Canada Governor Tiff Macklem is scheduled to participate in a Federal Reserve Bank of Kansas City panel discussion on Thursday.
Canadian government bond yields were higher across a steeper curve in sympathy with U.S. Treasuries on Tuesday. The 10-year yield rose 3.2 basis points to 0.593%, after hitting on Monday its lowest intraday level in nearly two weeks at 0.532%.
By Fergal Smith
