TORONTO: The Canadian dollar strengthened against its US counterpart on Monday as oil prices rose and the greenback again declined against a basket of major currencies, with the loonie approaching a six-week high notched last week.

The US dollar fell to its lowest level since June 2018, weighed by deteriorating US-China relations and concerns about the US economy as COVID-19 infections climbed.

"We have seen US dollar weakness pretty much across the board," said Rahim Madhavji, president at KnightsbridgeFX.com. "At the end of the day weakness in the US dollar is typically a risk-on event for the market."

Wall Street's main indexes were higher as investors monitored progress in government stimulus efforts, while the price of oil, one of Canada's major exports, settled 0.8% higher at $41.60 a barrel.

The Canadian dollar was trading 0.4% higher at 1.3366 to the greenback, or 74.82 US cents. The currency traded in a range of 1.3354 to 1.3413.

Last Thursday, the loonie touched its strongest intraday level since June 10, at 1.3347.

Data on Friday showed that speculators have reduced their bearish bets on the loonie to the lowest point since mid-March.

Canadian government bond yields edged higher across much of the curve on Monday along with higher yields on US Treasuries.

The 10-year yield was up 0.7 basis point at 0.514, having earlier touched its lowest intraday level since June 15 at 0.482%.

The Federal Reserve at the close of its two-day policy meeting on Wednesday could confirm recent hints about the benefits of an average inflation target, which would allow rates to stay lower for longer.

Canada's GDP report for May is due on Friday.