The U.S. dollar edged lower against its Canadian counterpart on Monday, as climbing oil prices lent support the commodity-related Canadian dollar, although fresh hopes for a U.S. rate hike this year limited the greenback's losses.
USD/CAD was down 0.13% at 1.2322 by 09:30 a.m. ET (13:30 GMT).
The Canadian dollar was supported by sharply higher oil prices on Monday, as optimismthat the market is on its way towards rebalancing added to bullish momentum.
But the U.S. dollar's losses were limited after New York Federal Reserve President William Dudley said the Fed is on track to gradually raise interest rates given factors depressing inflation are "fading" and the U.S. economy's fundamentals are sound.
“I expect inflation will rise and stabilize around the (Fed's) 2% objective over the medium term," he said before adding that "in response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually."
The loonie was also higher against the euro, with EUR/CAD declining 0.75% to 1.4633.
The single currency showed little reaction to a speech by European Central Bank president Mario Draghi on Monday in which he said the ECB will decide later this year on its policy measures.
Market participants were also still digesting the weekend's election results in Germany, which showed growing support for a far-right party.
Chancellor Angela Merkel won a fourth term in office on Sunday but will have to build a coalition to form a government as Conservatives lost support in the face of a surge by the anti-immigration Alternative for Germany (AfD).
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