File Photo: Reuters

TORONTO – The Canadian dollar strengthened to its highest in nearly two weeks against its U.S. counterpart on Monday, after Washington and Beijing's agreement for a ceasefire in their trade war boosted oil prices and stocks. 

Stocks and the price of oil, one of Canada's major exports, climbed after the US and China agreed to a 90-day truce in a trade dispute, and ahead of a meeting this week of the Organization of the Petroleum Exporting Countries that is expected to cut supply. 

US crude prices were up 4.2 percent at $53.05 a barrel. 

The lower price of oil since October has weighed on the outlook for Canada's economy, with the potential impact worsened by a historically big discount for Canadian heavy crude.

Alberta Premier Rachel Notley said on Sunday that the Western Canadian province would mandate temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and driven down Canadian crude prices.

Gains for the loonie came ahead of a Bank of Canada policy decision on Wednesday. Data on Friday showing Canada's economic growth slowed in the third quarter has underpinned market expectations that the central bank will not hike interest rates this week. 

The Bank of Canada will next raise interest rates early next year, according to a strong majority of economists polled by Reuters who still say two more rate rises will follow by end-2019. 

Canada's manufacturing sector expanded in November at the fastest pace in three months, boosted by a pickup in new orders and the strongest job creation in at least eight years, data showed on Monday.  

Canada's trade report for October is due on Thursday and the November employment report is due on Friday.