TORONTO: The Canadian dollar strengthened against the US dollar to its firmest in over a week Wednesday, helped in part by a low-volatility environment and investor interest in commodity currencies, though moves were limited with little economic data on tap.
"I think it's just a byproduct of the very low volatility environment that we seem to be in," said Adam Cole, global head of FX strategy at RBC Capital Markets in London.
"It's more (US) dollar than Canada today. We are just generally seeing the (US) dollar under a bit of pressure, particularly so against the other commodity currencies as much as CAD."
At 9:20 a.m. (1320 GMT), the Canadian dollar was at C$1.0871 versus the greenback, or 91.99 US cents, stronger than Tuesday's close of C$1.0904, or 91.71 US cents.
This was its strongest since June 2, when it touched C$1.0838 during the session.
Canada was also stronger against most other major currencies. The Canadian dollar was approaching levels not seen since January against the euro, which has been under pressure due to a widening yield gap between euro zone bonds and their major peers.
RBC expects the currency to trade between C$1.0865 and C$1.0905 during the session.
Canadian government bond prices were higher across the maturity curve, with the two-year up half a Canadian cent to yield 1.078 percent and the benchmark 10-year rising 6 Canadian cents to yield 2.342 percent.
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