The Canadian dollar jumped to a two-week high against the U.S. currency Thursday, as a stable economic backdrop boosted investors' confidence and appetite for risk.
Overnight, the Canadian currency reacted positively to stronger than expected Australian jobs data, which sent the greenback lower, as well as a rise in commodity prices.
"We've seen quite a big move in some of the Canadian dollar crosses," said Shaun Osborne, chief currency strategist at TD Securities, referring to the Canadian dollar reaching its strongest level against the euro since December 2007.
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"It continues to highlight just how Canada has really held up over the course of the last few weeks in the period of fairly significant uncertainty and broader market volatility," he said.
"The financial sector is holding up relatively well, the fiscal situation in Canada being much more sustainable than some of its larger economy peers, and people like the Canadian dollar story at the moment," Mr. Osborne said.
The Canadian dollar finished the session at 95.13 cents (U.S.), up from Wednesday's close at 94.07 cents. Earlier, the currency hit 95.42 cents, its highest level since Jan. 22.
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The commodity-linked currency got additional support from a rise in oil and gold prices, but Mr. Osborne did not think that was a big factor in today's move.
"We have seen a bit of a bounce in crude prices but I think it (the currency's rise) reflects the general confidence in the outlook for the Canadian dollar more than anything specific at the moment," he said.
With risk appetite back on, Canadian bond prices were mostly lower across the curve.
"People, I think, have been parking their money in the fixed-income area over the last couple of weeks given the uncertainty that's been present in Europe," said George Davis, chief technical strategist at RBC Capital Markets.
"But, given that equity markets are stabilized now, that certainly has triggered people to get out of their fixed income holdings."