Investing.com - The U.S. dollar eased against the Canadian dollar on Tuesday but remained close to more than five-and-a-half year highs as an ongoing selloff in oil prices pressured the commodity-exposed Canadian dollar lower.
USD/CAD dipped 0.13% to 1.1956, but remained close to session highs of 1.1994, the most since April 2009.
The Canadian dollar remained under heavy selling pressure on Tuesday as oil prices extended their selloff.
Crude oil prices fell to almost six-year lows, pressured lower by concerns over a global supply glut. The rout in oil prices has fuelled concerns of exacerbating already low levels of inflation in many major world economies, underpinning safe haven demand for the greenback.
Canada is one of the top global oil producing nations and the loonie has lost almost 3% so far this year amid expectations that the collapse in oil prices will see the Bank of Canada stick to its dovish stance on rates this year.
Elsewhere, the loonie was higher against the euro, with EUR/CAD down 0.69% to 1.4070.
The single currency remained under pressure amid heightened expectations that the European Central Bank could embark on full blown quantitative easing as soon as its next meeting on January 22.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 92.55, not far from the 12-year peaks of 92.76 scaled last week, supported by weakness in the euro.