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The Canadian dollar fell slightly Tuesday morning as investors became more confident that U.S. leaders could reach a budget agreement in the coming days.

The loonie was down 0.09 of a cent to 101.57 cents US shortly before stock markets opened.

Both President Barack Obama and House Speaker John Boehner have made significant concessions, gravitating away from their entrenched positions on spending cuts and tax increases.

A new proposal softens Obama's long-held insistence that taxes rise on individuals earning more than $200,000 and families making more than $250,000. He is now offering a new threshold of $400,000 and is lowering his 10-year tax revenue goals he had argued for a few weeks ago.

Also Tuesday, the U.S. current account trade deficit narrowed in the July-September quarter to the lowest level since late 2010, but the improvement may not last.

The U.S. Commerce Department said the deficit fell to $107.5 billion in the third quarter, down nine per cent from the second quarter imbalance of $118.1 billion. It was the lowest trade gap since the final three months of 2010.