The Canadian dollar strengthened to its highest level in nine days on Wednesday, rising 0.6% to C$1.4024 per U.S. dollar (about 71.31 U.S. cents). 

The gains were supported by a weaker U.S. dollar and a sharp increase in oil prices following the U.S. Federal Reserve’s decision to leave interest rates unchanged.

The Fed maintained its benchmark rate at 3.50%–3.75%, opting not to raise borrowing costs despite expectations from some investors that a rate hike was possible. The decision weakened the U.S. dollar as markets interpreted the move as a cautious, wait-and-see approach.

Oil prices surged 6.6% to US$84.46 per barrel after renewed military strikes in the Middle East heightened concerns about supply disruptions. As a major oil exporter, Canada typically benefits from higher crude prices, providing additional support for the Canadian dollar.

Meanwhile, Prime Minister Mark Carney said Canada is not considering restricting oil exports to the United States as leverage in ongoing trade disputes, arguing that such a move could damage the country’s long-term credibility.

The Bank of Canada also kept interest rates unchanged earlier this month, with policymakers expressing differing views on the strength of the economic recovery. Investors are now awaiting Canada’s upcoming GDP report, which is expected to show the economy expanded by 0.2% in May.

In the bond market, Canadian government yields were mixed. The 2-year yield edged slightly lower, while the 10-year yield moved higher, reflecting similar trends in U.S. Treasury markets.