The Canadian dollar remained close to its strongest level in roughly two months on Monday, supported by a sharp increase in oil prices and stronger-than-expected Canadian employment figures released last week.

The loonie was trading around C$1.3940 per U.S. dollar, equivalent to about 71.74 U.S. cents. It moved between C$1.3927 and C$1.3964 during the session. On Friday, the Canadian dollar briefly reached C$1.3923, its strongest intraday level since June 10, following data showing that Canada added significantly more jobs than economists had anticipated in July.

Market analysts noted that the strong employment report helped the currency overcome some of its previous weakness. The Canadian dollar had also been heavily sold by investors, meaning recent gains may have been amplified as traders reduced those bearish positions.

Trade relations between Canada and the United States remain another important factor for the currency. Officials from both countries are discussing a possible agreement under which Canada could address several U.S. trade concerns in exchange for Washington abandoning proposed new tariffs.

Meanwhile, oil prices provided additional support for the Canadian dollar. Crude prices jumped more than 5% to $82.13 per barrel amid growing uncertainty over efforts involving Iran and the United States to reopen the Strait of Hormuz.

Higher energy prices, however, could create challenges for central banks if they contribute to renewed inflationary pressure. Investors are therefore watching closely for signs that rising oil costs could influence future interest-rate decisions by the Bank of Canada.

Canadian government bond yields also increased on Monday. The 10-year government bond yield rose 7.4 basis points to 3.717%, reaching its highest level since May 19.