Canada's commodity-sensitive currency also benefited from sharply higher oil and metal prices, rising 0.44 of a cent to 100.34 cents US.
"Markets are entering the holiday-shortened week in a more upbeat fashion, perhaps reflecting a slightly more conciliatory tone," said Mark Chandler, Head of Canadian FIC Strategy at RBC Dominion Securities. U.S. markets are closed Thursday for Thanksgiving.
The U.S. economy risks going over a so-called fiscal cliff at the beginning of 2013, as the economy would suffer a severe setback from a combination of automatic spending cuts and the expiration of Bush-era tax cuts.
Fiscal cliff concerns started to ease Friday afternoon following a meeting between congressional leaders and U.S. president Barack Obama, with both Republicans and Democrats striking a more conciliatory stance.
And on Sunday, Obama said: "I am confident we can get our fiscal situation dealt with."
While there is still room for plenty of disappointment in resolving this potential crisis, markets were on the lookout for anything positive out of the negotiations.
Oil prices were higher for a second day on worries that oil supplies could be disrupted if the Israel-Hamas conflict engulfs countries elsewhere in the Middle East, a huge producer of crude.
January crude on the New York Mercantile Exchange was up $2.36 to US$89.28 a barrel.
Metals also rose with December copper eight cents higher to $3.53 a pound while December bullion gained $19.70 to US$1,734.40 an ounce.
Investors will also be monitoring latest developments in Greece’s bailout saga, amid hopes that the country’s euro partners and the International Monetary Fund will finally sign off on the release of at least €31.5 billion of cash the country needs to avoid going bankrupt.
Ministers from the euro group meet Tuesday, ahead of a summit of their leaders later in the week that will discuss the European Union’s budget for the next few years.
There were no major Canadian economic releases on Monday but traders will look to the September wholesale trade data Tuesday, retail sales numbers for September on Thursday and the October consumer price index on Friday.