TORONTO: The Canadian dollar strengthened to its highest level in nearly two weeks against its US counterpart on Tuesday as the price of oil, one of Canada's major exports, rose and the greenback broadly declined.

The loonie was trading 0.3% higher at 1.2699 to the greenback, or 78.75 US cents. The currency touched its strongest intraday level since Jan. 27 at 1.2694.

Part of the move was driven by gains in commodity prices but "a good chunk" was due to broader weakness in the US dollar, said Bipan Rai, North America head, FX strategy at CIBC Capital Markets.

"It's the familiar refrain of the US dollar just being weak in general," Rai said.Oil extended its rally for a seventh session to hit 13-month highs, supported by supply cuts and optimism over a recovery in fuel demand.

US crude oil futures settled 0.7% higher at $58.36 a barrel, while the US dollar fell to a one-week low against a basket of major currencies.

A slide in US Treasury yields raised doubts about the outlook for the greenback against the backdrop of a looming US fiscal stimulus package.

Canadian government bond yields were mixed across a flatter curve in sympathy with US Treasuries. The 10-year fell nearly 1 basis point to 1.004% after touching on Monday its highest intraday level since March last year at 1.027%.

Bank of Canada Deputy Governor Timothy Lane is due to speak on Wednesday, which could offer clues on the interest rate outlook. Some strategists expect the central bank to scale back its bond purchases as soon as April.