The Canadian dollar weakened against its broadly firmer U.S. counterpart on Tuesday, and remained range-bound as Bank of Canada Governor Stephen Poloz maintained a neutral tone on interest rate moves in a speech and news conference.

At 4:00 p.m. ET, the Canadian dollar was trading at $1.2777 to the greenback, or 78.27 cents US, down 0.6 per cent. The currency traded in a range of $1.2703 to $1.2820.

Speaking in Montreal, Poloz defended the use of inflation targets and repeated the bank's message that it was monitoring wage growth and inflation, as well as economic capacity to see how the economy was adjusting to the July and September rate hikes.

"I do think that on net, it may actually suggest that the hurdle for a move in policy in the near-term is somewhat of a high bar," said Mazen Issa, senior FX strategist at TD Securities in New York. "At the same time, I'm still somewhat encouraged that the data is evolving rather constructively."

The Bank of Canada is expected to hold rates steady in December following the two hikes. But data last Friday showing unexpected strength in the nation's job market has supported expectations of increases next year.

The U.S. dollar strengthened against a basket of major currencies as investors' spotlight was on the diverging monetary policies between the United States and the euro zone. 

Prices of oil cooled after rallying the most in six weeks the previous day, some three per cent, as the Saudi crown prince tightened his grip on power, and tensions flared between Saudi Arabia and Iran.

U.S., Mexican and Canadian officials will kick off some of the next round of talks to rework the North American Free Trade Agreement slightly ahead of schedule on Nov. 15, four officials familiar with the process said on Monday. Canada sends about 75 per cent of its exports to the United States and its economy could suffer if NAFTA collapses.

Canadian government bond prices were higher across the yield curve, with the two-year up four cents to yield 1.399 per cent and the 10-year rising 28 cents to yield 1.893 per cent, the lowest since Sept. 1.

The Canadian government issued $3 billion of a U.S. dollar-denominated five-year global bond at a spread of nine basis points over U.S. Treasuries, the first issue by Canada of a U.S. dollar global bond since March 2015.