The loonie closed up 0.26 of a cent to 95.47 cents US.
The greenback was stronger against many currencies as traders sought the perceived safe haven, while the loonie found support from higher gold and oil prices.
Markets were nervous a day after U.S. Secretary of State John Kerry claimed it was "undeniable" that the Syrian government had used chemical weapons in its conflict with rebel forces. The prospect of U.S.-led military action against the Assad regime was enough for investors to cut their exposure to risky assets.
The price of oil passed the US$109 a barrel mark Tuesday amid the latest round of worry centred on the Middle East. The October crude contract on the New York Mercantile Exchange ran ahead $3.09 to US$109.01 a barrel as traders assessed the potential for international intervention in Syria.
Oil prices have risen more than 15 per cent in the last three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially in Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes.
Geopolitical worries also boosted gold prices with the December contract on the Nymex running ahead $27.10 to US$1,420.20 an ounce.
Copper also advanced amid signs of improving economies in the U.S. and China and the September contract in New York was up one cent at US$3.33 a pound.
Data released Tuesday showed that the Standard & Poor’s/Case-Shiller 20-city U.S. home price index rose 12.1 per cent in June from a year earlier, nearly matching a seven-year high. And China's National Bureau of Statistics said that profit growth for industrial companies ran ahead to 12 per cent in July from 6.3 per cent in June.
Elsewhere on the economic calendar, traders took in data showing rising American consumer confidence. The U.S. Conference Board's August index came in at 81.5, up from 80.3 in July.
The strong reading followed other data released during the past two sessions which contained disappointing readings on home sales and durable goods orders.
Traders have been wondering if the Federal Reserve thinks the economy is strong enough to allow it to start to reduce its monetary stimulus next month.
At present, the Fed is buying $85 billion of financial assets a month in order to lower long-term interest rates and shore up the U.S. economic recovery. Up until recently, a run of data particularly related to the labour market, had ratcheted up expectations that the so-called tapering would begin in September.Suggest a correction