European equity markets rose and the price of oil, one of Canada's major exports, steadied near $100 a barrel following a plunge of more than 8% on Tuesday.
Still, demand for safe-haven assets remained intact, helping to drive the U.S. dollar to fresh 20-year highs against a basket of major currencies as the euro tumbled.
The Canadian dollar was trading 0.1% higher at 1.3020 to the greenback, or 76.80 U.S. cents, after trading in a range of 1.3013 to 1.3064. On Tuesday, it touched its weakest level since November 2020 at 1.3083.
Canada's employment report for June, due on Friday, could help guide expectations for a supersized interest rate hike next week by the Bank of Canada.
Money markets expect the central bank to raise its benchmark rate by three-quarters of a percentage point, which would be its biggest hike in 24 years.
As rates rise, Canada's once-scorching hot housing market has started to cool, with prices in the Greater Toronto Area falling for a fourth straight month in June.
Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year touched its lowest since June 3 at 3.026% before rebounding to 3.054%, down 2.3 basis points on the day.
(Reporting by Fergal Smith; Editing by Bernadette Baum)
