* C$ higher at 99.83 U.S. cents
* Bonds lower across curve, track U.S. debt prices
By Jennifer Kwan
TORONTO, Dec 7 (Reuters) - Canada's dollar rose on Tuesday, boosted by a U.S. tax deal and optimism that Ireland will pass an austerity budget and ahead of a Bank of Canada interest rate announcement.
Global equities, a key barometer of investors' willingness to buy risk, rose after U.S. President Barack Obama forged a compromise with Republicans to extend Bush-era tax breaks for two years. The deal was expected to extend breaks on dividends and capital gains. For details, see [ID:nN06211347]
As well, investors were optimistic Irish lawmakers will unveil a record austerity budget on Tuesday. [ID:nLDE6B60DA]
"The FX market appears to be responding with a good degree of optimism," said Sacha Tihanyi, currency strategist at Scotia Capital.
The Canadian dollar CAD=D4 climbed to a high of C$1.0011 to the U.S. dollar, or 99.89 U.S. cents. At 7:55 a.m. (1255 GMT), it stood at C$1.0017 to the U.S. dollar, or 99.83 U.S. cents, up from C$1.0053 to the U.S. dollar, or 99.47 U.S. cents, at Monday's close.
Oil, a key Canadian export, rallied above $90 a barrel, while gold and copper futures soared to record peaks.
But Tihanyi said Canada's dollar was "underperforming a little bit" as investors were cautious ahead of the the Bank of Canada's interest rate announcement due at 9 a.m.
With markets pricing in next-to-no-chance of a move, investors will eye the accompanying statement closely.
"Even though we're up, we're still not in the upper echelon of the performance charts probably because everybody wants to see the tone of the Bank of Canada statement," said Tihanyi.
Canadian bond prices were weaker across the curve, tracking U.S. Treasuries, which fell as the market braced for fresh supply. [US/]
The two-year Canada bond CA2YT=RR was down 4 Canadian cents to yield 1.582 percent, while the 10-year bond CA10YT=RR fell 40 Canadian cents to yield 3.174 percent. (Reporting by Jennifer Kwan; editing by Jeffrey Benkoe)