The Canadian dollar was higher against its U.S. counterpart on Thursday, after earlier touching a six-week low, as investors assessed the greenback's recent rally amid divergent central bank policy expectations and oil prices as they remained in a range of 1.2647 to 1.2594. At 2: 36 p.m. EST 1936 GMT, the Canadian dollar was up 0.02%, to 1.2605 to the U.S. dollar, or 79.33 U.S. cents, having earlier touched its weakest level since October 6, at 1.2627. The loonie slumped on Tuesday after domestic data showed inflation rose to 4.7% in October, in line with market expectations. Simon Harvey, FX market analyst for Monex Europe and Monex Canada said that in normal times, when you've got 4% plus inflation it would be quite positive for a currency. It came in at a time when G 10 inflation is surprising to the upside, whether it's the U.S., the UK or just globally, so the idea that Canadian inflation came in as expected was a bit of a factor in Canadian front-end bond yields. The greenback rally was 16 months high last week, as U.S. inflation in October ran at its hottest since 1990. Inflation in Britain increased to a 10 year high, data showed on Wednesday, bolstering expectations that the Bank of England will raise interest rates in December. The Canadian dollar is likely to trade sideways ahead of key U.S. data releases in the coming month, but overall the softness is likely to be temporary, said Erik Nelson, currency strategist at Wells Fargo Securities. Canada is one of the best placed G 10 currencies when you think about its domestic growth situation, the positive terms of trade shock from oil prices, the labor market, and the central bank, which is likely to be one of the more aggressive hikers in the G 10, he said. After China announced it was moving to tap reserves, the price of oil, one of Canada's major exports, went up slightly after hitting a six-week low. China moved after a Reuters report said that the United States was asking big consuming nations to consider a stockpile release to lower prices because inflationary pressures, driven in part by surging energy prices, start to cause a political backlash. U.S. crude prices went up 0.68% to $78.89 a barrel, while Brent crude added 1.16% to $81.21.