By Solarina Ho TORONTO, Dec 18 (Reuters) - The Canadian dollar softened against the U.S. dollar on Tuesday as investors continued to position around the uncertain U.S. fiscal budget negotiations. The Canadian dollar's weakness was counter to higher equity markets. It also added to losses by commodity-linked currencies, which dipped early after the Reserve Bank of Australia said mining investment had likely peaked. Global stocks rose to their highest levels since September on optimism that U.S. lawmakers will reach a deal on the U.S. fiscal crisis, but investors appeared reluctant to make big Canadian dollar bets one way or another. "Some resolution to that in the short term should be positive equities, which should be positive risk, which should be positive Canada. So we're waiting to see that. It's a matter of how much of that is built in," said Darcy Browne, managing director at Capital Markets Trading, CIBC. "People were expecting more things out of Canada at the moment and it's just not showing itself." The Canadian dollar stood at C$0.9857 versus the U.S. dollar, or $1.0145, slightly below Monday's North American close at C$0.9837 versus the U.S. dollar, or $1.0166. Analysts said the currency remained range-bound, trading between C$0.9832 and C$0.9859 throughout the session. Currency strategists are also eyeing significant financial flows expected on the back of several deals between Canadian and foreign companies. "Everyone's waiting for this M&A flow to play itself out. It should be Canada positive," said Browne, but added: "Canada at these levels is big-picture expensive." It was weaker across the board against other major currencies, except the Japanese yen and its fellow commodities-linked currencies, the Australian and New Zealand dollars. Australia's central bank said it decided to cut interest rates this month rather than wait because it saw further evidence that the peak in the mining investment boom was near, while the non-resource sector showed no signs of picking up. "All the other commodity currencies are also slightly weaker partially on the RBA's minutes, which highlighted that the investment boom in the mining industry is likely peaking, as well as a focus on employment, so that seems to be pulling down commodity currencies a little bit," said Camilla Sutton, chief currency strategist at Scotiabank. Canadian government bond prices were mixed, slipping across the long end. The two-year bond was flat with a yield of 1.153 percent, while the benchmark 10-year bond shed 18 Canadian cents to yield 1.843 percent.