The Canadian dollar advanced against its most major counterparts in the European session on Monday, as oil prices advanced amid tensions in Middle East.

Crude for March delivery rose $1.05 to $60.25 per barrel.

Israel shot down an Iranian drone over the weekend and launched attacks against Iranian site in Syria, from where it launched. While returning, one of Israel's jets, F-16 fighter was downed by Syrian forces.

Israeli army has deployed anti-missile systems to the Syrian border following the move, escalating conflict.

Sentiment remained buoyant on news that lawmakers have managed to end a brief government shutdown with a bill raising spending caps and funding the government until March 23rd.

German Chancellor Angela Merkel on Sunday vowed to serve another full four-year term inspite of criticism with her conservative party for concessions to forge coalition deal.

The loonie traded mixed against its major rivals in the Asian session. While it held steady against the aussie and the yen, it fell against the euro. Against the greenback, it rose.

The loonie bounced off to 86.57 against the yen and 1.5405 against the euro, from its early lows of 86.24 and 1.5441,respectively. If the loonie rises further, 88.00 and 1.52 are possibly seen as its resistance levels against the yen and the euro, respectively.

The loonie rose back to 1.2557 against the greenback, off its early low of 1.2597. This is just short of a pip to break its early 4-day high of 1.2556. The next possible resistance for the loonie is seen around the 1.23 mark.

On the flip side, the loonie dropped to 0.9853 against the aussie, from a high of 0.9822 hit at 3:00 am ET. The loonie is seen finding support around the 1.00 region.

Looking ahead, the U.S. monthly budget statement for January is set for release in the New York session.

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