NEW YORK (Reuters) – The Canadian dollar strengthened against its U.S. counterpart on Monday to a more than 2-year high, as investors’ appetite for riskier currencies surged following news of a promising coronavirus vaccine development.
At EST (1420 GMT), the Canadian dollar <CAD=> was trading 0.9% higher at 1.2934 to the greenback, or 77.32 U.S. cents. The currency’s strongest level of the session was 1.2928, its strongest since October 2018.
Pfizer Inc <PFE.N> on Monday said its experimental vaccine was more than 90% effective in preventing COVID-19 based on initial data from a large study, a major victory in the fight against a pandemic that has killed over 1 million people, roiled the world’s economy and upended daily life.
Pfizer and BioNTech are the first drugmakers to show successful data from a large-scale clinical trial of a coronavirus vaccine.
The news sent global stock markets and other risky assets soaring while safe-haven currencies such as the Japanese yen <JPY=> and the Swiss franc <CHF=> fell.
Risk sentiment was also supported by hopes of improved prospects for global trade after Democrat Joe Biden clinched the tightly-fought U.S. presidential election.
“The Canadian dollar smashed through the 1.30 mark this morning, gapping upward on a broad improvement in global risk appetite,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.
“Biden’s win and news of a potential vaccine are unleashing the “animal spirits” that drive economic activity – by making citizens more likely to spend and businesses more likely to invest, growth could accelerate materially into the winter months,” he said.
The loonie was further helped by a big surge in the price of oil, Canada’s largest export.
Oil jumped by almost 10% on Monday for its biggest daily gain in almost six months after news of the vaccine and on Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.
Canadian government bond yields were higher across the curve, with the 10-year <CA10YT=RR> up 8.7 basis points at 0.736%.
(Reporting by Saqib Iqbal Ahmed; Editing by Alistair Bell)