The loonie slid to its lowest level in nearly two years Tuesday morning as the U.S. dollar gained traction on confidence over the direction of bond yields.

The Canadian dollar dropped 0.43 of a cent to 94.87 cents US shortly before stock markets opened, reaching a level it last hit in September 2010.

The drop came after the Canada Day holiday, when the currency experienced low levels of trading, and amid expectations that current U.S. monetary policy will help drive U.S. bond yields higher.

Economies around the world were also facing pressure, which drove down other currencies.

Australia's central bank left interest rates unchanged and said the Australian dollar is likely to continue falling, easing pressure on the economy.

And in China, manufacturing weakened in June amid a credit crunch.

In commodities, the August crude contract on the New York Mercantile Exchange was up $1.55 cents to $99.54 US a barrel on political concerns in Egypt.

The country's military issued an ultimatum to President Mohammed Morsi that gave him 48 hours to meet the demands of the millions who have taken to the streets seeking his ouster.

August bullion was down $3.20 to $1,252.50 US an ounce on the Nymex.