The loonie was trading nearly unchanged at 1.2606 to the greenback, or 79.33 U.S. cents, having touched its strongest intraday level since April 2018 at 1.2580.
"Commodity-linked currencies have had a stellar performance in recent days thanks to widespread and sharp gains in the prices of a wide variety of commodities," said Erik Nelson, a currency strategist at Wells Fargo.
U.S. crude oil futures settled 3.8% higher at $61.49 a barrel, driven by the expected slow return of U.S. crude output after last week's deep freeze in Texas shut in production. Copper rose 1.6%, while gold was up 1.4%.
"Canada's yields have been able to keep up with and in fact outpace gains in U.S. yields, which has further bolstered the Canadian currency," Nelson said.
The gap between Canadian and U.S. 2-year yields has climbed 11 basis points since January to 13 basis points in favor of the Canadian bond.
The U.S. dollar resumed its slide against major currencies on Monday as traders focused on whether coronavirus vaccinations, economic growth expectations and higher inflation could push bond yields higher.
Canadian government bond yields rose across a steeper curve in sympathy with U.S. Treasuries. The 10-year touched its highest since February last year at 1.256% before pulling back to 1.238%, up 2.5 basis points on the day.
Bank of Canada Governor Tiff Macklem is due to speak on Tuesday on the impact of the coronavirus crisis on the labor market. The central bank has projected that Canada's economy would contract in the first quarter after lockdowns were implemented by a number of provinces to curb the spread of the pandemic.
(Reporting by Fergal Smith; Editing by Steve Orlofsky and Alistair Bell)
By Fergal Smith
