TORONTO: The Canadian dollar rose against its US counterpart on Monday as crude oil prices rallied and risk appetite firmed, while domestic attention turned to an economic update from Finance Minister Bill Morneau.
The currency strengthened even as the greenback gained ground against a broad basket of major currencies.
Oil prices rose after the world's oil consumer body said it expected US shale production to fall this year and next, potentially reducing the glut in supplies.
US crude prices were up 5.26 percent to $31.20 a barrel.
Global stock market gains added to support for the risk-sensitive commodity currency.
The implied probability of a rate cut by the end of 2016 dipped to 78 percent from 87 percent on Friday.
Morneau, due to speak at 10:30 EST (1530 GMT), is expected to give a clearer picture of the federal budget due out next month. The deficit is expected to be larger than the C$10 billion promised by the Liberals during last year's election campaign as the oil shock hampers growth.
At 9:14 a.m. EST (1414 GMT), the Canadian dollar was trading at C$1.3711 to the greenback, or 72.93 US cents, stronger than Friday's official close of C$1.3769, or 72.63 US cents.
The currency's strongest level of the session was C$1.3689, while its weakest level was C$1.3793.
Bearish bets by speculators against the Canadian dollar were pared further after reaching five-month highs in January.
Net short Canadian dollar positions decreased to 45,085 contracts in the week ended Feb. 16 from 51,935 in the prior week, Commodity Futures Trading Commission data showed on Friday.
Canadian government bond prices were mixed across the maturity curve, with the two-year price down 2 Canadian cents to yield 0.458 percent and the benchmark 10-year rising 3 Canadian cents to yield 1.116 percent.
The Canada-US 10-year spread was 1 basis point lower at -63.84 basis points as Treasuries slightly underperformed.
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