Chances of a rate hike this year have surged to more than three-in-four after hawkish comments this week from central bank officials, including Governor Stephen Poloz. Chances were less than one-in-four before stronger-than-expected jobs data on Friday.

Strengthening of the currency could put pressure on often-leveraged speculators to cover short positions, which had reached a record high, and accelerate any gains in the loonie.

At 9:44 a.m. ET (1344 GMT), the Canadian dollar was trading at C$1.3184 to the greenback, or 75.85 US cents, up 0.4 percent.

The currency's weakest level of the session was C$1.3245, while it touched its strongest since Feb. 28 at C$1.3165.

Gains for the loonie came even as prices of oil, one of Canada's major exports, fell after data showed a build in US crude stocks and OPEC reported a rise in its production despite a pledge to cut supply.