U.S. stocks extended their rally into the new year as monetary policy easing from Beijing to prop up its economy added to optimism fueled by easing trade tensions and an improving global outlook.
Canada is a major exporter of commodities, including oil, so its economy could benefit from an improved outlook for the global economy.
"Positive developments on the trade front, along with firmer oil prices as 2020 kicks off, should place USD-CAD in a sell-the-rally stage for the time being," Ronald Simpson, managing director, global currency analysis at Action Economics, said in a note.
U.S. crude oil futures settled 0.2% higher at $61.18 a barrel, supported by signs of improving Washington-Beijing trade relations and rising tensions in the Middle East.
At 2:55 p.m. (1955 GMT), the Canadian dollar
The currency, which traded in a range of 1.2969 to 1.3008 was little changed despite the U.S. dollar gaining ground against a basket of major currencies and data showing that Canadian manufacturing activity expanded in December at its slowest pace in four months.
The IHS Markit Canada Manufacturing Purchasing Managers' index (PMI) fell to a seasonally adjusted 50.4 in December, its lowest level since August, from 51.4 in November.
On Tuesday, the loonie notched a 14-month high at 1.2952. The currency strengthened 5% in 2019.
Canadian government bond prices were higher across a flatter yield curve, with the two-year up 5.5 Canadian cents to yield 1.67% and the 10-year rising 58 Canadian cents to yield 1.638%.
By Fergal Smith
