Canadian Dollar Advances As Oil Prices Rise

The Canadian dollar climbed against its major rivals in European deals on Tuesday, as oil prices recovered from yesterday's sharp sell-off, although excess global production, coupled with demand concerns due to weak economic outlook capped strong gains.

Crude for September delivery rose $0.64 to $45.81 a barrel.

Investors responded positively to new restrictions by Chinese regulators on short-selling of shares to stabilize share prices. Under new rules, short sellers must wait at one day to cover their positions and pay back loans used to buy shares. China is the world's second largest oil-consuming nation.

Weak manufacturing data from China and U.S., as well as reports of high levels of production from OPEC countries took the oil prices to six-month lows overnight.

The currency has been trading firmer against its major rivals, except the aussie, in the previous session.

The loonie climbed to 94.59 against the yen and 1.3105 against the greenback, reversing from early multi-month low of 94.08 and a session's low of 1.3175, respectively. The next possible resistance for the loonie may be located around 94.00 against the yen and 1.30 against the greenback.

The loonie edged up to 1.4376 against the euro, compared to 1.4404 hit at yesterday's close. Continuation of the loonie's uptrend may lead it to a resistance around the 1.43 level.

On the flip side, the loonie declined to a 2-month low of 0.9706 against the aussie. The pair was valued at 0.9581 at Monday's close.

Looking ahead, U.S. factory orders for June and Canada manufacturing PMI for July are slated for release in the New York session.