TORONTO: The Canadian dollar rose against its US counterpart on Monday, approaching a three-year high, supported by domestic data showing factory activity growing in April and the Federal Reserve's message that it is too early to dial back stimulus.

The US economy is poised to grow at the fastest rate in decades but conditions are still not nearly strong enough for the Fed to consider pulling back its support, New York Fed Bank President John Williams said.

"The dovish comments really produce a lot of market confidence," said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. "That free money gives the market room to expand, so that's going to help commodity currencies like the Canadian dollar."

The Fed's benchmark interest rate is currently set at near zero, as is the Bank of Canada's.

Last month's signal from Canada's central bank that it may begin raising interest rates before the Fed has lit a fire under the Canadian dollar, but past tightening cycles show faster liftoff may not be sustained, particularly if the loonie overshoots.

The Canadian dollar was trading 0.1% higher at 1.2272 to the greenback, or 81.49 US cents, having traded in a range of 1.2266 to 1.2317. On Friday, it touched its strongest intraday level since February 2018 at 1.2262.

Canadian manufacturing activity grew for the 10th straight month in April as production and new orders climbed, with the pace easing only slightly from the previous month's record level, data showed.

Global equity markets were not far from a record and the price of oil, one of Canada's major exports, settled 1.4% higher at $64.49 a barrel.