* Higher oil prices boost Canadian dollar
* Aussie dollar hits 12-day high on rising iron-ore prices
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, May 15 (Reuters) - The Canadian dollar hit its highest level in over two weeks and the Australian dollar hit a 12-day high on Monday as a bounce in oil prices drove a recovery in major commodity-linked currencies. Saudi Arabia and Russia agreed on Monday to extend oil output cuts until March 2018 to rein in a global crude glut, pushing up prices by as much as 2 percent and dominating morning trade on European currency markets.
That gave the Canadian dollar a 0.7 percent lift, hitting its highest level since April 27, at C$1.3609 per dollar.
With (Other OTC: WWTH - news) prices of the iron ore it exports also rising, Australia's dollar hit a 12-day high of $0.7444, up 0.8 percent on the day, while the New Zealand dollar rose 1 percent to $0.6915.
Weekly positioning data also showed speculators are net long Australian dollars, which helped it move away from last week's four-month lows.
"The commodity currencies story is quite clear and it's very much linked around oil (prices)," said Jane Foley, currency strategist with Rabobank in London.
"There had been quite a large selloff in currencies such as the Canadian dollar, Australian dollar, and they were probably quite ripe for some short covering on the news we had from Saudi and Russia over the weekend."
After quiet trading in morning hours, the euro had risen 0.3 percent by midday to $1.0973, analysts flagging $1.10 as a potential level for the single currency to cross this week.
Investors appear to have taken a more optimistic view on the single currency after pro-European Emmanuel Macron's victory in France's presidential election, with the euro marking its first net long positioning since early May 2014.
The dollar started the week on the defensive after U.S. economic data came in shy of expectations and a weekend missile test by North Korea saw investors buy into the safe haven yen.
The dollar index, which tracks the greenback against a basket of six major currencies, was 0.3 percent lower on the day at 99.877
But after slipping versus the yen in Asian trade, the dollar recovered ground to trade 0.1 percent higher at 113.46 yen .
U.S. data on Friday showed a smaller-than-expected 0.4 percent increase in April retail sales from March, while a disappointing consumer prices report raised concerns for the retail sector and the broader economy.
The Federal Reserve is widely expected to raise interest rates at its June meeting and has forecast two more hikes this year following its a quarter point increase in March. Fed funds futures are pricing in a 90 percent chance of a rate hike in June, according to the CME's Fedwatch tool.
Kathleen Brooks, research director at CityIndex noted U.S. rate hike expectations appear to be "barrelling ahead" of economic data and the dollar.
"This suggests that the Fed may normalise interest rates even if the economic data goes through a rough patch. It also suggests that the prospect of rate hikes to bring interest rates back to a normal level may not lead to a surge in the buck," she wrote in a note. (Editing by Alexander Smith and Pritha Sarkar)