Question

Why magnetic needle shows deflection when placed near a current carrying circuit?

Answer 1

The simplest explanation is that the needle aligns itself with the direction of the magnetic field lines. Since the lines are perpendicular to the direction of current, the needle will try to align that way also. It is only deflected west because Earth's magnetic field is still pulling the needle to point north.

Answer 2

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The $\sf{\bold{compass\:needle}}$ is a small magnet. When the compass needle is brought close to a bar magnet, the magnetic field lines of the compass needle interact with the magnetic field lines of bar magnet, which causes the compass needle to deflect.

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