The Canadian dollar continues to hold steady after strengthening to the highest level seen in three months against the US dollar during the previous session, boosted by the prevailing risk-on sentiment in markets and by the gain in crude oil prices. At the time of writing, USD/CAD is trading at around 1.339.

The recent strength in the Loonie can be attributed to the rally in crude oil prices as Canada is a key exporter of oil. Oil prices have been trading bullish in recent weeks amid rising hopes for improvement in oil demand as economies emerge from lockdown and resume activity around the world.

Canada is also easing lockdown measures, allowing hair salons and restaurants to resume operations in Ontario, one of the more populous provinces in the country. Economists anticipate USD/CAD to continue trading bearish in the near future as the risk appetite returns to global financial markets.

The Canadian dollar received an additional boost on Monday after data released showed that housing starts in Canada increased to 193k in May from around 166k in April. The data points to signs of economic recovery and supports the bearishness in USD/CAD.