The heavily shorted Canadian dollar strengthened to an 11-day high against its U.S. counterpart on Tuesday, with investors managing their currency risk as Americans headed to the polls and after data showed a pick-up in Canada's services sector.

Financial markets began the week on a cautious note, though moves in currencies stole the spotlight on Monday ahead of a busy week headlined by the U.S. presidential race which is set to come down to the wire.

The Canadian dollar weakened to a two-year low against its U.S. counterpart on Friday as the greenback notched broad-based gains ahead of the U.S. presidential election and despite domestic data that showed factory activity growing at a faster pace.