The Canadian dollar edged higher against the US currency and the Japanese yen as oil prices rose above $72 a barrel today on hopes for an improving economic outlook and a growing appetite for risk among investors. The loonie thus climbed to a 4-day high versus the yen.

U.S.crude for August delivery rose $1.08 to $72.57 a barrel by 4:22 am ET, off its earlier eight-month high of $73.38.

London Brent crude was up $1.09 to $72.08 a barrel.

Oil prices were also supported by a weaker U.S. dollar, which can make commodities denominated in the currency more attractive to investors.

Against the US dollar, the Canadian currency edged higher during early deals on Tuesday. At 5:40 am ET, the loonie reached a high of 1.1517 versus the greenback, compared to 1.1566 hit late New York Monday. The next upside target level for the Canadian currency is seen around 1.136.

The Canadian dollar that closed Monday's North American session at 1.6291 against the European currency declined to a new multi-month low of 1.6329 in Asian deals on Tuesday. Thereafter, the loonie reversed its direction and is presently trading at 1.6274 versus the euro with 1.614 seen as the next target level.

Euro zone annual inflation turned negative for the first time since the formation of the bloc, the Eurostat report showed today. Consumer prices dropped 0.1% annually in June, after staying flat in May. Economists were expecting an annual decrease of 0.2%.

The German unemployment rate, French PPI, Italian PPI and CPI, Euro-zone M3 money supply reports, which were also released today likely influenced the euro. 

Against the Japanese yen, the Canadian dollar gained ground after hitting a low of 82.65 at 2:50 am ET Tuesday. The loonie-yen pair is currently trading at a 4-day high of 83.4, compared to Monday's closing value of 83.12. If the pair gains further, 83.8 is seen as the next target level.

The loonie edged down to 0.9399 against the Australian dollar at 2:00 am ET Tuesday. This set the lowest point for the Canadian currency since August 12, 2008. On the downside, 0.952 is seen as the next target level for the Canadian dollar. The pair that closed yesterday's New York deals at 0.9351 is now worth 0.9384.

Traders now look forward to the New York session, in which the S&PCase-Shiller home price index for April and the consumer confidence report for June are scheduled for release. 

Canada condemns Honduran coup

OTTAWA — Canada has added its name to a growing list of countries condemning a military coup that ousted the president of the Central American country of Honduras.


President Barack Obama and leftist Latin leaders have already rallied around President Manuel Zelaya and called for his immediate return to office.


A statement from the Harper government echoed the mushrooming opposition to the coup, but it didn't mention Zelaya by name or directly call for his return to power.


"Canada condemns the coup d'etat that took place over the weekend in Honduras, and calls on all parties to show restraint and to seek a peaceful resolution to the present political crisis, which respects democratic norms and the rule of law, including the Honduran Constitution," Peter Kent, minister of state for foreign affairs, said Monday in a statement.


"Democratic governance is a central pillar of Canada's enhanced engagement in the Americas, and we are seriously concerned by what has transpired in Honduras," added Kent, who will be in Washington, D.C. on Tuesday to attend an extraordinary session of the Organization of American States's general assembly on the situation in Honduras.


Kent said the government, through its mission at the Washington-based Organization of American States, is working closely with other partners in the hemisphere to determine what role the organization can play to help diffuse the situation.


Zelaya was seized by the Honduran military and flown to Costa Rica early Sunday after days of mounting tensions over his plan to hold a public vote to measure support for changing the constitution to let presidents seek re-election beyond a single four-year term.


His plan for a vote, which was to take place Sunday, angered the army, the Honduran Congress and the Supreme Court.


The Honduran Congress voted Roberto Micheletti in as the country's new leader just hours after Zelaya left the country, but Zelaya has said he is determined to return and "reclaim his post."


President Hugo Chavez of Venezuela, a Zelaya ally who survived an attempted army coup in 2002, led talks with the ousted president and other allies in neighbouring Nicaragua.


OAS Secretary General Jose Miguel Insulza was expected to join the group in Managua, the capital of Nicaragua, later Monday.


The leaders of Nicaragua, Costa Rica, Bolivia and Brazil are among those who have rallied around Zelaya in the face of the first military coup in Central America in over a decade.


Kent said Canadians in Honduras are encouraged to "exercise prudence" and to avoid large crowds and areas of possible confrontation. Canadians in the capital of Tegucigalpa are advised to remain in their residences.