TORONTO (Reuters) - The Canadian dollar rose slightly against the greenback on Monday, building modestly on gains made late last week, as investors paused to assess the recent drastic moves in the price of oil and the U.S. dollar.
The loonie, as Canada's currency is colloquially known, has dropped steeply since late October in line with a fall in the price of crude oil, a major Canadian export.
In that same period, the U.S. dollar has climbed versus most major currencies as more hawkish-looking U.S. central bankers have expressed increasing confidence in the U.S. economic recovery.
"We could be entering a period of rest here where several currencies and several asset classes have made really large moves and now it's time to catch your breath and rethink where things should be valued," said Camilla Sutton, chief currency strategist at Scotiabank.
"But certainly that fall in oil prices is a material shift for the Canadian dollar," she said.
The price of a barrel of oil has steadily fallen since mid-2014 due to excess supply and subdued demand. It rose on Monday, which Sutton said likely supported the loonie.
The Canadian dollar CAD=D4 was last seen trading at C$1.1309 to the greenback, or 88.43 U.S. cents, stronger than Friday's close of C$1.1333, or 88.24 U.S. cents.
The loonie jumped on Friday on a surprisingly robust domestic jobs report after hitting a more than five-year low of C$1.1466 earlier in the week.
The fundamental picture remains in favor of further gains for the U.S. dollar, however, with Japan again easing monetary policy and the euro zone economic picture making a strong case for similar action from the European Central Bank.
With little Canadian economic data of note on tap until inflation figures later in the month, Scotiabank's Sutton said Canada's currency may take near-term direction from upcoming Chinese figures on new loans, industrial production and retail sales.
Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR flat to yield 1.018 percent and the benchmark 10-year CA10YT=RR down 7 Canadian cents to yield 2.033 percent.
Editing by Peter Galloway