TORONTO: The Canadian dollar was stronger against its US counterpart on Monday, driven primarily by a jump in crude prices as investors piled in after data showed a falling US rig count, which could signal lower production down the line.
Canada is a major oil producer and the currency has tracked the dramatic slide in crude prices over the last half year. Industry data showed a record weekly drop in the number of US oil rigs being used, with the count down 24 percent from its October peak.
US crude prices at one point touched above $50 a barrel on Monday.
"The bounce-back in oil - you're almost at $50 on WTI - is helping Canada, along with most of the other commodity currencies this morning," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
At 10:06 a.m. (1506 GMT), the Canadian dollar was at C$1.2592 to the greenback, or 79.42 US cents, significantly stronger than Friday's close of C$1.2711, or 78.67 US cents.
Canadian trade data for December and January employment figures on both sides of the border later this week will be key areas of focus for market participants seeking further direction.
Canadian government bond prices were mixed across the maturity curve, with yields near record lows. The two-year was up 1 Canadian cent, yielding 0.385 percent, and the benchmark 10-year was down 3 Canadian cents to yield 1.253 percent.
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