By Deborah Levine SAN FRANCISCO (MarketWatch) -- The Canadian dollar erased a loss against its U.S. counterpart on Tuesday after the Bank of Canada left its benchmark interest rates unchanged, as analyst expected. Central bank officials said the economy is expected to expand moderately because of global headwinds and household debt burdens, although the persistent strength of the Canadian dollar because of a spillover from international policies is a challenge. The U.S. dollar USDCAD -0.2038% gave up gains to trade at 99.20 Canadian cents, down from 99.76 Canadian cents before the decision. The statement was "bullish for the Canadian dollar as it is one of the few countries which is tackling both current and a future build up of systemic risks at home," said Sebastien Galy, currency strategist at Société Générale.

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