Modest gains for the loonie came as the Organisation for Economic Cooperation and Development forecast that Canada's economy will grow 2.8 percent this year after a 1.4 percent expansion in 2016.

The OECD said higher interest rates will help cool "booming housing markets" and that macro-prudential measures should be tightened further to address economic and financial risks related to the housing market.

Prices of oil, one of Canada's major exports, fell on renewed concerns about the efficacy of Organization of the Petroleum Exporting Countries-led production cuts due to rising tensions within the export group over Qatar and growing US output.

US crude  prices were down 1.22 percent at $47.6 a barrel.

The European Central Bank meeting, a parliamentary election in the UK and testimony by former US FBI Director James Comey to a Senate committee are due on Thursday.

At 9:35 a.m. ET (1335 GMT), the Canadian dollar was trading at C$1.3440 to the greenback, or 74.40 US cents, up 0.1 percent.

The currency's weakest level of the session was C$1.3461, while it touched its strongest since May 29 at C$1.3427.

Against the euro, the Canadian dollar strengthened to C$1.5109 after a report suggesting the European Central Bank, rather than swinging decisively towards a tighter monetary stance this week, is preparing to cut its outlook for inflation.

The Bank of Canada's review of developments in the financial system is also due on Thursday, followed by a news conference with Governor Stephen Poloz. Investors will weigh Poloz's assessment of the health of the housing and mortgage markets in light of recent troubles at non-bank lender Home Capital.

The value of Canadian building permits declined 0.2 percent in April, the third monthly decrease in a row, data from Statistics Canada showed.

Canadian government bond prices were lower across a steeper yield curve, paring some recent gains in sympathy with US Treasuries.