The loonie was trading 0.2% higher at 1.2729 to the greenback, or 78.56 U.S. cents, having traded in a range of 1.2714 to 1.2763.
"Relatively firm oil prices, along with a risk-on backdrop, this morning supported the CAD," Ronald Simpson, managing director, global currency analysis, at Action Economics, said in a note.
Wall Street's main indexes rose as U.S. Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package to help the world's largest economy ride out a pandemic-driven slump.
Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures settled 1.2% higher at $52.98 a barrel.
Canada is pressing people at the highest levels of U.S. President-elect Joe Biden's incoming administration to reconsider canceling the Keystone XL pipeline, Prime Minister Justin Trudeau said.
Canadian factory sales decreased by 0.6% in November from December, the first drop in three months, Statistics Canada said. Separate data for the same month showed wholesale trade rising 0.7%.
Canada's inflation report for December and a Bank of Canada interest rate decision are due on Wednesday.
Analysts see a small chance of a 'micro rate cut," with the central bank moving its benchmark rate by less than 25 basis points, avoiding negative rates. The policy rate was last cut in March to a record low of 0.25%.
Canadian government bond yields were mixed across the curve, with the 10-year down half a basis point at 0.805%.
(Reporting by Fergal Smith; editing by Jonathan Oatis and Sonya Hepinstall)
By Fergal Smith
