Loonie continues to grind higher

The Canadian dollar gained against the U.S. dollar for the sixth straight session Monday, rising more than a quarter of a cent to close at 77.42 cents US.

Foreign exchange analysts said the recent surge in oil prices has helped to boost the loonie's fortunes.

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Crude oil futures gained $1.25 US to settle at $45.74 US on Monday. Oil prices have gained on recent talk that Saudi Arabia may be open to efforts to deal with the global oil supply glut that has sent prices tanking.

"Oil is up on speculation that the Russians and the Saudis, who are, of course, the big producers, are going to get together and put a cap on production," said David Baskin, the president of Baskin Wealth Management.

"The last time this happened, of course, the Saudis pooh-poohed the deal and said we're just going to keep the spigots wide open, which is what they did. So I don't know if this is really going to happen or not," he said.

Near-term risks for dollar

A currency commentary from Scotiabank said oil prices remain dominant in driving recent movement in the Canadian dollar. 

Its foreign exchange staff said oil's push above $45 US a barrel hinted at "the potential for further near-term strength" for the dollar, while noting that currency traders will look at Tuesday's manufacturing sales report and Friday's retail sales figures and the release of the July inflation report to get a better sense of where the loonie will be heading.

"[The Canadian dollar is] continuing to trade closely with oil prices as of late last week," agreed Rahim Madhavi of Knightsbridge Foreign Exchange . "[West Texas Intermediate's] break of $45/barrel extends last week's rally, which has been CAD-supportive," he said, referring to the trading term for the Canadian dollar.

But some analysts say the once-strong correlation between higher oil prices and a stronger loonie is fading. "Other drivers of the Canadian dollar are stepping into the spotlight," CIBC foreign exchange strategist Bipan Rai told Bloomberg.

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"Traders are taking a more macro-focused approach to the Canadian dollar," he told the financial news site, referencing recent data that show the Canadian economy to be growing at a weaker pace than the U.S. economy.