The United States and China sought to ease tensions on Monday, with Beijing calling for calm and US President Donald Trump predicting a trade deal after markets fell in response to new tariffs from both countries.

That boosted risk sentiment, sending stock prices higher, and gave a modest boost to the Canadian currency.

Ongoing concerns about the trade dispute, however, may cap further gains.

Canada exports many commodities, including oil, so its economy could be hurt by a slowdown in the flow of global trade.

"The rekindling in risk aversion in global markets should, while it persists, underpin USD-CAD," analysts at Action Economics said in a report on Monday.

The Canadian dollar was last up 0.14% at 1.3260 to the greenback. It has held between 1.3248 and 1.3344 since Aug. 15.

Ten-year Canadian bond yields rose to 1.21% from 1.17% late on Friday.