The Canadian dollar strengthened against the US currency on Friday as the greenback came under pressure following a report that showed the US current account gap widened to a new record.
Canadian bonds opened stronger, building on gains seen on Thursday when the market responded positively to weak US economic data. At 9:15 am (1315 GMT), the Canadian dollar was at C$1.3668 to the US dollar, or 73.11 US cents, up from C$1.3723 to the US dollar, or 72.87 US cents, at Thursday' close.
"It's mainly predicated upon the current account data that we had out of the US Obviously compared to the previous number it's shown a deterioration which is bearish for the US dollar," said George Davis, director of global research at RBC Capital Markets.
"The Canadian dollar has benefited as a result of that. That's the primary reason behind the appreciation." The US first quarter current account deficit widened to $144.9 billion, exceeding economists' forecasts for a gap of $141 billion.
The wide US deficit the broadest measure of the nation's global trade has been a persistent weight on the US dollar over the last two years. Davis said the Canadian currency's recent move through C$1.3732, a key technical level, had also encouraged Canadian dollar bulls.
"You have seen people jump on the bandwagon on the back of that as well, and sell US dollars and buy the Canadian dollar," he said. The US numbers shifted the currency market's attention from Canada's tightly fought election campaign.