The Canadian dollar eked out a modest gain against the U.S. dollar on Wednesday, supported in part by firmer oil prices, as cautious investors positioned themselves ahead of a meeting of global central bank leaders later this week.

With few domestic drivers to move the currency this week, all eyes are on Jackson Hole, Wyoming, where U.S. Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are expected to speak, though neither are expected to make new policy statements.

"The main story in currency markets is that people are keeping their powder dry — we're definitely not seeing any big directional moves in any G10 currencies at the moment," said Karl Schamotta, director of global markets strategy at Cambridge Global Payments.

Oil rose on Wednesday after data showed U.S. crude inventories fell for the eighth straight week, while a storm heading toward the Gulf Coast had the potential to disrupt output. U.S. crude prices settled at US$48.41 a barrel, up 58 cents US or 1.21 per cent.

At 4:00 p.m. ET, the Canadian dollar traded at $1.2547 to the greenback, or 79.70 cents US, up 0.1 per cent.

The currency traded between $1.2542 to $1.2598 in thin summer activity.

The loonie has rallied nearly seven per cent since the start of the year, buoyed by a softer greenback and upbeat domestic economic data that prompted the Bank of Canada to raise interest rates for the first time in seven years last month. The central bank is expected to raise rates again this fall.

Currency strategists were forecasting the U.S. dollar to regain some strength in the second half of this year, however.

Canadian government bond prices were higher across the maturity curve, with the two-year price up two cents to yield 1.259 per cent and the benchmark 10-year rising 31 cents to yield 1.884 per cent.

The Canada-U.S. two-year bond spread stood at -5.3 basis points, while the 10-year spread stood at -28.8 basis points.