The loonie added 0.14 of a cent to 83.7 cents US.
U.S. financial markets were closed for the Martin Luther King Jr. holiday.
The Canadian central bank is universally expected to leave its key rate at one per cent, where it has been since September 2010.
It has been widely believed that the Bank of Canada could move to raise rates later in the year after the U.S. Federal Reserve starts hiking its own rates away from near zero. However, there are questions about impact of the slide in crude oil prices on the Canadian economy and how this could affect central bank thinking about when rates should start to rise.
"The bank (is) poised to deliver its rate decision and revised forecasts with tectonic shifts in some of its underlying assumptions — notably a 4.5 per cent decline in the value of the Canadian dollar and a 40 per cent drop in oil prices since forecasts were last prepared in October," observed Mark Chandler, head of Canadian FIC strategy at RBC Dominion Securities.
"The BoC is on record as saying the net impact will be bad for Canada."
Oil has plunged 55 per cent from the highs of June 2014 and is down 40 per cent just since the end of November after Saudi Arabia-led OPEC refused to cut production levels to support prices.
Oil prices fell Monday in electronic trading in New York after JPMorgan Chase became the latest financial institution to slash its oil price forecast for 2015. The bank said Monday that Brent crude — a global benchmark for oil — will average out at US$49 a barrel, down sharply from the $82 a barrel it previously forecast.
Late in the afternoon, The February crude contract in New York fell $1.17 to US$47.52 a barrel.
Meanwhile, copper prices fell a day before the release of figures expected to show growth in the Chinese economy slowed to a 7.2 per cent pace in the most recent quarter from 7.3 per cent in the prior quarter. March copper in New York was down four cents in electronic trading to US$2.58 a pound.
Elsewhere on commodity markets, February gold faded $1.50 to US$1,275.40 an ounce.
Meanwhile, traders are also looking to the European Central Bank to unveil on Thursday a major program of quantitative easing involving the massive purchase of government bonds to support a weak economic recovery in the eurozone.
It is also hoped that such a program will increase inflation pressures. The region's price pressures have been extremely low and that has raised worries that it could fall prey to deflationary pressures, a situation where businesses and consumers hold off on purchases in the hope that items will just get cheaper.Suggest a correction