The Canadian dollar strengthened against a broadly weaker U.S. dollar as positive sentiment in Europe helped to push the Canadian dollar close to parity with the greenback. Rising oil prices also helped lift the commodity-linked currency.
The U.S. dollar was recently at C$1.0051 by 10:30am in New York on Monday, from C$1.0133 late Friday.
The Canadian dollar was underperforming towards the end of last week due to oil prices trading below US$100 per barrel. Canada is a major oil producer and exporter and so the loonie is sensitive to oil price movements.
Oil prices fell further in the Asian market open in light trading due to most Asian markets closed due to the Lunar New Year holiday but picked up in the European return as market sentiment there was improving ahead of the EU finance minister meeting and optimism on a Greek debt deal to be reached.
Meanwhile, crude oil prices were given a lift further due to reports that the European Union agreed to slap an embargo on oil imports from Iran.
Light, sweet crude oil for March delivery on the New York Mercantile Exchange was trading at $99.78 a barrel, up from an earlier low of $97.43.