TORONTO: Canada's currency gained sharply against its US counterpart on Friday, as investors broadly sold the greenback a day after the US Federal Reserve decided to hold interest rates steady amid global uncertainty.
In Canada, the government reported inflation held steady in August, in line with expectations, leaving the Fed move as the main catalyst for Canadian markets.
"I think you need a pretty significant deviation (in inflation) to have it have a large impact on the currency, given that we're still working through the fallout from yesterday's (US Federal Reserve) meeting," said Andrew Kelvin, senior rates strategist at Toronto-Dominion Bank.
At 8:51 a.m. ET (1251 GMT), the Canadian dollar was trading at C$1.3030 to the greenback, or 76.75 US cents, stronger than the Bank of Canada's official close of C$1.3174, or 75.91 US cents.
The currency's strongest level of the session was C$1.3013, its strongest since Aug. 13, while its weakest level was C$1.3183.
The Canadian dollar was outperforming most of its key currency counterparts, though not its commodity-related cousins the Australian and New Zealand dollars.
US crude prices fell 2.6 percent to $45.69 a barrel, while Brent crude lost 1.2 percent to $48.51.
Canadian government bond prices were higher across the maturity curve, with the two-year price up half a Canadian cent to yield 0.479 percent and the benchmark 10-year rising 18 Canadian cents to yield 1.513 percent.
The Canada-US two-year bond spread was -19.9 basis points, while the 10-year spread was -64.7 basis points.
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