The Canadian dollar edged higher against its U.S. counterpart on Tuesday, recovering from an earlier one-month low, as a speech by a Bank of Canada policymaker did not offer major clues on the outlook for interest rates.

Canada's economic growth is expected to decline over the next few quarters but continue to exceed the rate of potential output, Deputy Governor Sylvain Leduc said in a speech that added another dovish tone to the bank's message.

The central bank has raised rates twice since July. But the chances of another hike as soon as this month have dwindled to 20 per cent from nearly 40 per cent before Governor Stephen Poloz signaled last week that a third hike was not imminent, the overnight index swaps market indicated. 

"We didn't get headline risk out of the Bank of Canada today," said Eric Theoret, a currency strategist at Scotiabank. "It was a very quiet session."

At 5 p.m. ET, the Canadian dollar was trading at $1.2486 to the greenback, or 80.09 cents US, up 0.2 per cent.

The currency's strongest level of the session was $1.2481, while it touched its weakest since Aug. 31 at $1.2539.

Prices of oil fell as speculators took profits on some large positions that have built up in the last couple of weeks.

U.S. crude prices settled 0.3 per cent lower at US$50.42 a barrel.

Canadian government bond prices were higher across the yield curve, with the two-year gaining 2 cents to yield 1.523 per cent and the 10-year rising 12 cents to yield 2.113 per cent.

Canada's trade data for August is due on Thursday and the September employment report is scheduled for release on Friday.